Question

On its bank reconciliation for the month of December, Pack Corp. noted its bank collected on a note receivable due from one of Pack's customers. A total of $550 was collected out of which $500 represented principal and $50 represented interest. Question: In Pack Corp.'s month-end journal entry to record this reconciling item, which of the following is (are) true? (check all that apply) Select one or more: a. The 'Interest Revenue" account should be credited for $50.b. The "Note Recevable" account should be credited for S550.c. The "Interest Revenue" account should be debited for $50.d. The "Note Receivable account should be debited for $500. e. The "Note Receivable" account should be credited for $500 .f. The 'Note Receivable' account should be debited for $550

Answer 1

The following are applicable:

a. The ' Interest Revenue ' account should be credited for $ 50.

e. The ' Note Receivable' account should be credited for $ 500.

Step-by-step explanation:

The total amount collected by the bank is $ 550, representing the payment of the note of $ 500 and interest of $ 50.

The note receivable has been settled, so it should decrease and thus credited by the amount of $ 500.

The interest is an income and thus an increase should be credited by $ 50.

The other options are not valid because in b. the note receivable is credited by $ 550, which is not correct.

in option c, the interest is debited which is not the case as there is no reduction of interest.

in options d and f, the note receivable is debited which would represent an increase in note receivable which is not the case.