Question

Presented below are three receivables transactions. Indicate whether these receivables are reported as accounts receivable, notes receivable, or other receivables on a balance sheet. (a) Advanced $10,000 to an employee. select an account title (b) Received a promissory note of $34,000 for services performed. select an account title (c) Sold merchandise on account for $60,000 to a customer.

Answer 1

(A) Other receivables

(B) Notes receivable

(C) Accounts receivable

Step-by-step explanation:

(A) Advanced $10,000 to an employee - Other receivables - Neither it is a note receivable nor it is an account receivable. So, it is considered as the other receivables

(B) Received a promissory note of $34,000 for services performed - Notes receivable - As the promissory note is received so it is considered as notes receivable and hence, shown in current assets in the balance sheet

(C) Sold merchandise on account for $60,000 to a customer - Accounts receivable - As the sale is made on credit. The journal entry is shown below:

Accounts receivable A/c Dr $60,000

To Service revenue A/c $60,000

(Being service provided is recorded)