When the maker of a note defaults:
A)An account receivable is recorded for the principal amount of the note only.
B)An account receivable is recorded in the amount of the principal plus interest through the maturity date.
C)Any interest earned for the current period is not recorded,since the maker has defaulted.
D)Any interest earned in a previous period that has already been recorded as interest receivable is written off as a loss due to the maker's default.

Question

Quizplus · Accepted Answer

When the maker of a note defaults, an account receivable is recorded in the amount of the principal plus interest through the maturity date. This is because the lender is still entitled to receive the principal and any interest that has accrued up to the point of default. Any interest earned for the current period would not be recorded, but any interest earned in a previous period that has already been recorded as interest receivable would not be written off as a loss due to the maker's default.

When the Maker of a Note Defaults