Question

On September 1, Horn Co. accepted a 60-day, 5% note in the amount of $3,000 from a customer. On the due date of the note, the customer dishonors the note and fails to pay. The journal entry that Horn would make on the due date would include debit to:

Answer 1

Accounts Receivable for $3,025

Step-by-step explanation:

Answer 2

Notes Receivables $3,025.

Step-by-step explanation:

As the company issued a note on credit, an notes Receivables account created. Therefore, it is the duty to pay the due during the maturity date. If he fails to pay, the notes receivables account will become debit again.

Therefore, notes receivable is debit.

Calculation:

Interest on Notes receivables on due date -

$3,000 x 5% x (60/360) = $150 x (1/6) = $25

Total amounts to be paid -

$3,000 + 25 = $3,025.