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Valley spa purchased $9,900 in plumbing components from tubman co. valley spa signed a 60-day, 8% promissory note for $9,900. if the note is dishonored, but tubman intends to continue collection efforts, what is the journal entry to record the dishonored note? (use 360 days a year.)

Respuesta :

akiran007

Answer:

Tubman Co

Journal Entry

Sr. No               Particulars                                Debit        Credit

1.          Accounts Receivable - Valley Spa  $ 10032

                       Interest Revenue                                   $ 132

                    Notes Receivable                                    $ 9,900

To charge account of Valley Spa for a dishonored note and interest of

$ 9,900 *8% * 60/360= $ 132

The entry records the full amount, including interest , to ensure that it is included in the collection efforts.

Restoring the account also reminds the company to continue collection efforts for both principal and interest.

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