If a 5%,four-month note receivable is acquired from a customer in settlement of an existing account receivable of $50,000,the accounting entry for acquisition of the note will:
A)Include a debit to Notes Receivable for $50,822.
B)Include a debit to Notes Receivable for $50,208.
C)Include a credit to Interest Revenue for $822.
D)Include a debit to Notes Receivable for $50,000 and no entry for interest.

Question

Quizplus · Accepted Answer

The note receivable is recorded at its face value of $50,000, and interest is not recorded at the time of acquisition but rather accrued over time.

If a 5%,four-Month Note Receivable Is Acquired from a Customer