Question

Demonstrate the required adjusting entry needed to record a $1,000 note receivable collected by the bank by choosing the correct entry below. a. Debit Cash $1,000 and credit Notes Payable $1,000. b. Debit Notes Receivable $1,000 and credit Cash $1,000. c. Debit Cash $1,000 and credit Accounts Receivable $1,000. d. Debit Cash $1,000 and credit Notes Receivable $1,000.

Answer 1

d. Debit Cash $1,000 and credit Notes Receivable $1,000.

Step-by-step explanation:

Notes receivable are assets for the firm that occur when other parties make a promise which is documented to give a certain amount at the time of demand or on a particular date.

As we know that when assets will increase it will be debited and when assets will decrease, it will be credited.

In the given case, note receivable collected by the bank which indicates that asset is decreased because note receivable has already been collected however it was increased when not collected. And cash received here that means asset increased and hence Debit Cash $1,000 and credit Notes Receivable $1,000.