Frontline Company holds a $1,000, 12%, 90-day note of J. Candioto. At maturity,

Question

Frontline Company holds a $1,000, 12%, 90-day note of J. Candioto. At maturity, Candioto dishonors the note. How would the company record dishonoring of the note? Debit Accounts Receivable-J. Candioto for $1,000 and credit Notes Receivable for $1,000. Debit Notes Receivable-J. Candioto for $1,000 and credit Accounts Receivable for $1,000. Debit Accounts Receivable-J. Candioto for $1,030 and credit Notes Receivable for $1,030. Debit Notes Receivable-J. Candioto for $1,030, credit Interest Revenue for $30, and credit Accounts Receivable for $1,000. Debit Accounts Receivable-J. Candioto for $1,030, credit Interest Revenue for $30, and credit Notes Receivable for $1,000.

Explanation / Answer

Entry for dishonoring of the note will be as revenue will be increase with the interest amount and total amount to be received will be increase by accounts receivable

Debit Accounts receivable J candioto $1,030

Credit Notes receivable $1,000

Credit interest revenue $30

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