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14 May, 04:18

When a company receives an interest-bearing note receivable, it will A. debit Notes Receivable for the maturity value of the note. B. debit Notes Receivable for the face value of the note. C. credit Notes Receivable for the maturity value of the note. D. credit Notes Receivable for the face value of the note.

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  1. 14 May, 06:48
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    B. debit Notes Receivable for the face value of the note.

    Explanation:

    Whenever a note is receivable, it is an asset as the amount will be collected in the future, that is with exchange of such asset there is a benefit defined in terms of cash to be received by the the company.

    Therefore, it will be a debit and not the credit.

    Whenever a notes receivables with interest bearing element is received then the asset is carried at face value, that is recorded at face value.

    As the interest to be received is part of income and not asset, therefore, notes receivables will be recorded at face value.

    The correct option is:

    B. debit Notes Receivable for the face value of the note.
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