On November 1, Eli Co. received a $6,000, 60-day, 6% note from a customer as payment on his $6,000 overdue account. Eli's journal entry to record this transaction on November 1, would include a:Multiple select question.debit to Notes Receivable for $6,000.debit to Accounts Receivable for $6,060.credit to Notes Receivable for $6,060.credit to Accounts Receivable for $6,000.
Question
On November 1, Eli Co. received a 6,000 overdue account. Eli's journal entry to record this transaction on November 1, would include a:Multiple select question.debit to Notes Receivable for 6,060.credit to Notes Receivable for 6,000.
Solution
The correct journal entry for Eli Co. on November 1 would include a debit to Notes Receivable for 6,000.
Here's the step-by-step explanation:
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When the customer gives Eli Co. a note, it means that the customer promises to pay Eli Co. 6,000.
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At the same time, the customer's overdue account of 6,000. In accounting, a decrease in an asset account is recorded as a credit. Therefore, Eli Co. would credit its Accounts Receivable account for $6,000.
The 6% interest on the note is not included in this journal entry because it is not due yet. The interest is recorded as revenue for Eli Co. when it is actually received, which is at the end of the 60-day period.
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