Uniform Supply accepted a $8,400, 90-day, 8% note from Tracy Janitorial on October 17. What entry should Uniform Supply make on January 15 of the next year when the note is paid

Cash $8,568, credit Interest Revenue $28, credt Interest Receivable $140, credit Notes Receivable $8.400

Explanation:

The journal entry in the case when the note is paid is as follows:

Cash $8,568    

    To Interest revenue $28($8,400 × 8% × 15 ÷ 360)  

    To Interest receivable $140 ($8,400 × 8% × 75 ÷ 360)  

    To Notes receivable $8,400

(To record the note receivable)

Here the cash is debited as it increased the assets while on the other hand the interest revenue, interest receivable and note receivable is credited as it increased the revenue and decreased the assets

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