When an interest-bearing note comes due and is uncollectible, the journal entry includes debitingA. Notes Receivable and crediting Accounts Receivable. B. Notes Receivable and crediting Accounts Receivable and Interest Revenue. C. Accounts Receivable and crediting Interest Revenue. D. Accounts Receivable and crediting Notes Receivable and Interest Revenue.
In this case the note is no longer a "note receivable." Notes receivable will be credited, but since it is not written off, it becomes accounts receivable.
The answer would be D. Interest revenue will be increased by the amount of the Unaccrued interest if it is expected to be collected.
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