Rec Room Equipment Company received a $10,200, six-month, 7 percent note to settle an $10,200 unpaid balance owed by a customer. a. The note is accepted by Rec Room on November 1, causing the company to increase its Notes Receivable and decrease its Accounts Receivable. b. Rec Room adjusts its records for interest earned to its December 31 year-end. c. Rec Room receives the interest on the note's maturity date. d. RecRoom receives the principal on the note's maturity date.

Question

Keenan Clarke

Business

8 June, 19:41

Rec Room Equipment Company received a $10,200, six-month, 7 percent note to settle an $10,200 unpaid balance owed by a customer. a. The note is accepted by Rec Room on November 1, causing the company to increase its Notes Receivable and decrease its Accounts Receivable. b. Rec Room adjusts its records for interest earned to its December 31 year-end. c. Rec Room receives the interest on the note's maturity date. d. RecRoom receives the principal on the note's maturity date.

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Jacqueline Gibson · Answer 1

Answer:1. Causing the company to increase it's Notes Receivable and decrease it's Accounts Receivable

Explanation:

On the substitution of the notes for the account receivable, the account receivable is credited and corresponding debit entry is made to the note receivable account.

The recording of the note receivable will take care of the principal on maturity and interest payment therein.