Asked by Nawaf AMehemeed on Apr 25, 2024
Verified
Valley Spa purchased $7,800 in plumbing components from Tubman Co.Valley Spa signed a 60-day,10% promissory note for $7,800.If the note is dishonored,but Tubman intends to continue collection efforts,what is the journal entry to record the dishonored note? (Use 360 days a year.)
A) Debit Accounts Receivable $7,930; debit Bad Debt Expense $130; credit Notes Receivable $8,060.
B) Debit Bad Debt Expense $7,930; credit Accounts Receivable $7,930.
C) Debit Bad Debt Expense $7,800; credit Notes Receivable $7,800.
D) Debit Accounts Receivable-Valley Spa $7,800; credit Notes Receivable $7,800.
E) Debit Accounts Receivable-Valley Spa $7,930,credit Interest Revenue $130; credit Notes Receivable $7,800.
Promissory Note
An economic device featuring a commitment in writing from one party to another, agreeing to transfer a specific sum of money, which can be requested anytime or on an agreed-upon date later.
Plumbing Components
The various fittings, fixtures, and pipes used in the installation and maintenance of plumbing systems.
Dishonored Note
A promissory note that has not been paid by the issuer at its maturity date.
- Calculate and record transactions related to notes receivable, including interest calculations and dishonored notes.
Verified Answer
Learning Objectives
- Calculate and record transactions related to notes receivable, including interest calculations and dishonored notes.
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