Question

Schmidt Co. holds Murphy Inc.'s $20,000, 90-day, 8% note. What is the entry to be made by Schmidt Co. when the note is collected, assuming no interest has previously been accrued?

Answer 1

The entry to be made by Schmidt Co. when the note is collected is to debit cash and credit notes receivable.

Step-by-step explanation:

The entry to be made by Schmidt Co. when the note is collected is as follows:

1. Debit: Cash (amount collected)
2. Credit: Notes Receivable (amount of the note)

In this case, Schmidt Co. would debit its cash account for the amount collected from Murphy Inc. and credit its notes receivable account for the amount of the note.