Question

Demonstrate the required adjusting entry needed to record a $1.000 note receivable collected by the bank by choosing the cirect entry below

a. Debt Cash $1,000 and credit Notes Receivable $1,000
b. Debit Cash $1,000 and credit Accounts Receivable $1000
c. Debit Notes Receivable $1,000 and emot Cash $1.000
d. Debut Cash $1000 and creat Notes Rayable $1000

Answer 1

The required adjusting entry needed to record a $1,000 note receivable collected by the bank is to debit Cash $1,000 and credit Notes Receivable $1,000.

Step-by-step explanation:

The correct adjusting entry to record the collection of a $1,000 note receivable by the bank is:

- Debit: Cash $1,000

- Credit: Notes Receivable $1,000

This entry accurately reflects the accounting treatment for the transaction. The debit to the "Cash" account acknowledges the increase in cash resulting from the collection of the note receivable. On the other hand, the credit to the "Notes Receivable" account recognizes the reduction in the Notes Receivable balance, indicating that the obligation represented by the note has been fulfilled.

This adjusting entry adheres to the fundamental accounting principles of accurately reflecting changes in asset accounts and recognizing the impact of transactions on the financial position of the entity. It provides a clear representation of the cash collection process for the note receivable.