Chapter 7, Problem 10QS

To determine

Note receivable:

It refers to the amount that is to be received by a company from a third party on a promise to pay at any specified future date.

Maturity date:

It refers to the date at which the amount of a note receivable is expected to be received or the amount of a note payable is expected to be paid.

Journal entry:

It means record of financial data related to business transactions in a journal in a manner so that debit equals credit. It provides an audit trail to the auditor and a means to analyze the effects of transactions to an organization’s financial health.

Rules of journal entry:

• Assets: Increase in asset should be debit and decrease should be credit.
• Liabilities: Increase in liabilities should be credit and decrease should be debit.
• Equity: Increase in Equity should be credit and decrease should be debit.
• Expense: Increase in expense should be debit and decrease should be credit.
• Revenue: Increase in revenue should be credit and decrease should be debit.

To prepare: Journal entries for the given transactions of note receivable and honor of note receivable.