Harrowgate Landscaping Ltd.’s November bank statement shows that the bank collected a 2,000 note receivable plus 60 of interest on the company’s behalf, and credited $30 of interest on the account. Record the book-side additions in one entry.
Harrowgate Landscaping Ltd.’s November bank statement shows that the bank collected a 2,000 note receivable plus 60 of interest on the company’s behalf, and credited $30 of interest on the account. Record the book-side additions in one entry.
Answer
Dr Cash 2090; Cr Notes Receivable 2000; Cr Interest Revenue 90
Accounts - Cash - Notes Receivable - Interest Revenue - Accounts Receivable - Service Revenue The bank has already added 2,060 + 30 to the account; the books must catch up: **Cash** (debit) 2,090; **Notes Receivable** (credit) 2,000 for the principal collected; **Interest Revenue** (credit) 90 — 60 on the note plus 30 from the bank. The trap is **Accounts Receivable**: the customer’s debt was a note, not an open account. Service Revenue is not involved.
Hermanson Vol 1 ch 8 (internal control over cash; the bank reconciliation — adapted shape 17; petty cash); Dauderis & Annand §7.1–7.3; OpenStax Accounting Vol 1 §8.2–8.6 (concept map P1–P4)