Question

DonCo, Inc. sold merchandise on January 14, and accepted a 90-day, 5% promissory note in the amount of $5,000. On January 14, the entry to record this transaction would include a debit to: Multiple choice question. Notes Receivable in the amount of $5,000 Accounts Receivable in the amount of $5,000 Cash in the amount of $5,000 Sales in the amount of $5,000

Answer 1

DonCo, Inc.

On January 14, the entry to record this transaction would include a debit to:

Notes Receivable in the amount of $5,000

and a credit to Sales in the amount of $5,000.

Step-by-step explanation:

Since the note was accepted on the same date the sales were made there is no need posting to the Accounts Receivable account. Cash account was not involved in this transaction as it was made on credit. The entry to record the transaction is to debit the Notes Receivable and credit the Sales Revenue with the sum of $5,000 respectively.