Sloan Company receives a $3,000, 3-month, 6% promissory note from Day Company in settlement of an open accounts receivable. What entry will Sloan Company make upon receiving the note? a. Notes Receivable 3,045Accounts Receivable-Day Company 3,045b. Notes Receivable 3,045Accounts Receivable-Day Company 3,000Interest Revenue 45c. Notes Receivable 3,000Interest Receivable 45Accounts Receivable-Day Company 3,000Interest Revenue 45d. Notes Receivable 3,000Accounts Receivable-Day Company 3,000

c. Notes Receivable 3,000 Interest Receivable 45 Accounts Receivable-Day Company 3,000 Interest Revenue 45

Explanation:

Interest from the Notes Receivable Sloan company receives = $3,000x6%x3/12 = $45

When receiving the note, the company have to record the decreasing of Accounts Receivable and the interest amount by the entries:

1. Debit Notes Receivable $3,000

Credit Accounts Receivable-Day Company $3,000

2. Debit Interest Receivable $45

Credit Interest Revenue $45

If the company received cash, the entry will be:

Debit Cash $3,045

Credit Notes Receivable $3,000

Credit Interest Receivable $45