If a 5%, 120-Day Note Receivable Is Acquired from a Customer

If a 5%, 120-day note receivable is acquired from a customer in settlement of an existing account receivable of $50,000, the accounting entry for acquisition of the note will:

A) Include a debit to Notes Receivable for $50,822.
B) Include a debit to Notes Receivable for $50,208.
C) Include a credit to Interest Revenue for $822.
D) Include a debit to Notes Receivable for $50,000 and no entry for interest.

Correct Answer:

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