Asked by Drayven Fenton on May 10, 2024
Verified
Leek Company receives a $12000 3-month 5% promissory note from Rey Company in settlement of an open accounts receivable. What entry will Leek Company make upon receiving the note? a.
Notes Receivable12,150 Accounts Receivable-Rey Company 12,150\begin{array}{lrr} \text { Notes Receivable} &12,150\\ \text { Accounts Receivable-Rey Company } &&12,150\\\end{array} Notes Receivable Accounts Receivable-Rey Company 12,15012,150
b.
Notes Receivable 12,150 Accounts Receivable-Rey Company 12,000 Interest Revenue150\begin{array}{lrr} \text { Notes Receivable } &12,150\\ \text { Accounts Receivable-Rey Company } &&12,000\\ \text { Interest Revenue} &&150\end{array} Notes Receivable Accounts Receivable-Rey Company Interest Revenue12,15012,000150
c.
Notes Receivable 12,000 Interest Revenue150 Accounts Receivable-Rey Company 12,000 Interest Revenue 150\begin{array}{lrr} \text {Notes Receivable } &12,000\\ \text { Interest Revenue} &150\\ \text { Accounts Receivable-Rey Company } &&12,000\\ \text { Interest Revenue } &&150\end{array}Notes Receivable Interest Revenue Accounts Receivable-Rey Company Interest Revenue 12,00015012,000150
d.
Notes Receivable12,000 Accounts Receivable-Rey Company 12,000\begin{array}{lrr} \text { Notes Receivable} &12,000\\ \text { Accounts Receivable-Rey Company } &&12,000\\\end{array} Notes Receivable Accounts Receivable-Rey Company 12,00012,000
Promissory Note
A financial instrument where the writer promises to pay a specific sum to a specified person or bearer at a determined date.
Accounts Receivable-Rey Company
This term is not standard; however, "Accounts Receivable" typically refers to the money owed to a company by its customers for goods or services delivered but not yet paid for.
Interest Revenue
Income earned from lending money or investing in interest-bearing financial instruments, recorded in the income statement.
- Comprehend the appraisal and documentation of short-term receivables.
Verified Answer
Learning Objectives
- Comprehend the appraisal and documentation of short-term receivables.
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