Accompanying the bank statement was a credit memo for a short-term note collected by the bank...

Accompanying the bank statement was a credit memo for a short-term note collected by the bank for the customer. What entry is required in the company's accounts?

		debit Notes Receivable; credit Cash
		debit Cash; credit Miscellaneous Income
		debit Cash; credit Notes Receivable and Interest Revenue
		debit Accounts Receivable; credit Cash

Expert Solution

The answer is option third - debit Cash; credit Notes Receivable and Interest Revenue.

When a bank statement show a credit memo for note collected by the bank for the customer, it means cash is collected by the bank for the notes receivable. In this case cash should be debited because cash is received by the bank against note receivable so Note receivable should be credited along with interest revenue on the note.

ekkarill92 answered 2 years ago

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