Question

On March 14, Teal Co. accepted a 120-day, 6% note in the amount of $10,000 from AZC Co., a customer. On the due date of the note, AZC honors the note and pays in full. The journal entry that Teal would make to record payment of this note would include a credit to:

Answer 1

Answer:a credit to Interest revenue for $200

Step-by-step explanation:

Interest = Principal x rate x time ( period )

= $10,000 x 6% x 120/360

=$200

Account titles and explanation Debit Credit

Cash $10,200

Note receivable $10,000

Interest revenue $200

Therefore, The journal entry that Teal would make to record payment of this note would include a credit to Interest revenue for $200