Question

On January 1, Year 1, Boyd Corporation accepts a $10,000 three-month, nine percent promissory note from one of its customers. To record acceptance of the note, the company will record a:

Answer 1

Answer:

The borrower records its receipt of cash and new liability with this entry

Jan 1             Notes Receivable   $10,000 Dr.

                             Sales / Accounts Receivable         $10,000 Cr.

Received Note of 3 months with  9% interest

The entry would  credit to Sales if it is received against sales or credit to account receivable isf it is received against accounts receivable for a further time period as the case may be.