Asked by Briana Haddad on Jul 16, 2024
Verified
Jasper's entry to record the transaction should be:
A) Debit Notes Receivable for $25,000; credit Cash $25,000.
B) Debit Accounts Receivable $25,000; credit Notes Receivable $25,000.
C) Debit Cash $25,000; credit Notes Receivable for $25,000.
D) Debit Notes Payable $25,000; credit Accounts Payable $25,000.
E) Debit Notes Receivable $25,000; credit Sales $25,000.
Notes Receivable
Written promises for amounts to be received by a business, usually detailing interest and the due date for repayment.
Cash Loan
A type of loan where the borrower receives a cash amount upfront and agrees to pay back both the principal and interest over a set period.
- Ascertain the full value upon maturity of notes receivable and account for the revenue from interest.
Verified Answer
TO
timii odunfaJul 19, 2024
Final Answer :
A
Explanation :
When Jasper loans money to Clayborn Co., he should record the loan as a note receivable because it is a formal agreement to receive cash in the future. The correct entry is to debit Notes Receivable for the loan amount, indicating an increase in assets, and credit Cash for the same amount, indicating a decrease in assets.
Learning Objectives
- Ascertain the full value upon maturity of notes receivable and account for the revenue from interest.
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