This company received a promissory note from a customer on July 1, 2013. The fac
ID: 2425914 • Letter: T
Question
This company received a promissory note from a customer on July 1, 2013. The face amount of the note is $45,000; the terms are 12 months and 10% annual interest.
Refer to Art Shoes. At the maturity date, the customer pays for the note and interest. The company made the proper adjustment at the end of December for interest. The effect of recognizing the transaction on the maturity date is:
A. Decrease to cash
B. Decrease to notes receivable
C. An increase to discount on Notes Receivable
D. An increase to notes receivable
Explanation / Answer
Recognizing the transaction on the maturity date will decrease the notes receivable as the cash will increase and notes receivable will decrease.
Answer in B.