Explanation Accounts receivable: Accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account. In other words, accounts receivable are amounts customers owe to the business. Accounts receivable is an asset of a business. Dishonored note: Note receivable refers to a written promise by the debtor for the amounts to be received within a stipulated period of time. Note is otherwise known as promissory note. If this promissory note is not settled by the debtor at its maturity date, then it became is known as dishonored note. Journalize the entries to record the receipt of payment. Date Account Title and Explanation Debit ($) Credit ($) December 30 Cash 245,427 Accounts receivable 243,600 Interest revenue 1,827 ( To record the collection of cash on account along with 9% interest) Table (1) Then, on December 30, Cash has been collected on account along with interest. • Collection of cash on account and interest increases cash. Hence, to increase the cash account balance, debit the cash account with $245,427. • When an account receivable is received, it has to be cancelled by decreasing the account receivable account. To decrease the (asset account) account receivable, credit the account receivable account with $243,600. • Interest revenue earned has to be recognized at maturity date. Hence, to increase the interest revenue balance, credit the interest revenue account with $1,827. Working note 1: Calculate the amount of interest revenue earned on account for the period of 30 days...

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7.2 Ch 7: Notes Payable and Interest, Revenue recognition explained; Author: Accounting Prof - making it easy, The finance storyteller;https://www.youtube.com/watch?v=wMC3wCdPnRg;License: Standard YouTube License, CC-BY

Record the entries that would be made to record the receipt of payment.

Solution Summary: The author explains that accounts receivable refers to the amounts to be received within a short period from customers upon the sale of goods and services on account.

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Record the entries that would be made to record the receipt of payment.

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