Asked by Gloria Martin-Mays on Jul 26, 2024
Verified
Jax Recording Studio purchased $7,800 in electronic components from Music World.Jax signed a 60-day,8% promissory note for $7,800.Music World's journal entry to record the sales transaction is:
A) Debit Accounts Receivable $7,800; credit Sales $7,800
B) Debit Accounts Receivable $7,904; credit Sales $7,904
C) Debit Notes Receivable $7,800; credit Sales $7,800
D) Debit Notes Receivable $7,904; credit Sales $7,904
E) Debit Notes Receivable $7,800; debit Interest Receivable $104; credit Sales $7,904
Promissory Note
A written promise to pay a specified amount of money to a designated person at a specified date or on demand.
Electronic Components
Basic discrete devices or physical entities in an electronic system used to affect electrons or their associated fields.
- Calculate the finish line amount of notes receivable and monitor the income attributable to interest.
Verified Answer
JF
Johnny FontaineJul 27, 2024
Final Answer :
C
Explanation :
Since Jax Recording Studio signed a 60-day promissory note for $7,800, Music World would record this transaction by debiting Notes Receivable for $7,800 and crediting Sales for $7,800. This is because Music World sold electronic components to Jax Recording Studio and the payment will be received in the future through the promissory note. Option A and B are incorrect because they both suggest that Music World received payment immediately in the form of accounts receivable, which is not the case. Option D is incorrect because it suggests that Music World earned interest on the sale, which is not mentioned in the scenario. Option E is incorrect because it combines two different accounts (Notes Receivable and Interest Receivable) and the interest earned is not provided in the scenario.
Learning Objectives
- Calculate the finish line amount of notes receivable and monitor the income attributable to interest.
Related questions
Duerr Company Makes a $60,000,60-Day,12% Cash Loan to Ryan Co \(\bold{\text{(Use ...
Jasper's Entry to Record the Transaction Should Be ...
Failure by a Promissory Notes' Maker to Pay the Amount ...
Giorgio Italian Market Bought $4,000 Worth of Merchandise from Food ...
Giorgio Italian Market Bought $4,000 Worth of Merchandise from Food ...