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Cart Corporation accepted a note receivable from a credit customer who failed to pay their $2,000 Accounts Receivable balance. The customer signed a promissory note which was accepted for 45 days at 5% interest. At the end of 45 days, the customer pays the balanceon Notes Payable and interest. What is the journal entry for receiving the payment of the note and interest?

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federicomartinez376

Answer:

At the time of receiving the document, the client's debt is canceled and the registration of the document plus interest is recorded (2000 x 0.05 = 100)

notes receivable      2.100

Accounts Receivable       2.000

interest to accrue                 100

 

then at the time of payment (we assume  its in cash, we record the income, the cancellation of the document and the interest earned.

Cash                      2,100

Interest to accrue      100

nterest income               100

Receivable notes         2.100

 

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