Question

prepare the journal entry that national limited would record on the note it received from wildhorse limited, assuming it makes adjusting entries monthly, for the payment of $86,400 to wildhorse limited on july 1. (credit account titles are automatically indented when the amount is entered. do not indent manually. if no entry isrequired,select

Answer 1

National Limited would debit Cash and credit Notes Receivable or a specific liability account on July 1 for the payment it received from Wildhorse Limited. The amounts would both be $86,400, reflecting the increase in cash and the settlement of the receivable or payable.

Step-by-step explanation:

The question pertains to the preparation of a journal entry for National Limited concerning the payment it received from Wildhorse Limited. Considering that National Limited makes adjusting entries monthly, we will assume they are dealing with an accrual basis of accounting. On July 1, when National receives payment, the journal entry would be a debit to Cash and a credit to Notes Receivable or a specific liability account if the payment was to settle a debt.

The entry would look something like this:
Debit Cash $86,400
Credit Notes Receivable (or specific liability account) $86,400
This entry recognizes the increase in cash as well as the reduction or settlement of the receivable or payable related to Wildhorse Limited.

Please note, since the question mentions adjusting entries, if any interest was earned on the note throughout the month and not yet recorded, an additional adjusting entry for accrued interest would need to be made before this payment entry.