If some of the interest has already been accrued

If some of the interest has already been accrued - collect...

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If some of the interest has already been accrued (through adjusting entries that debited interest  receivable and credited interest revenue), then the previously accrued interest is credited to interest  receivable and the remainder of the interest is credited to interest revenue. When the maker of a promissory note fails to pay, the note is said to be dishonored. The dishonored  note may be recorded in one of two ways, depending upon whether or not the payee expects to 
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Unformatted text preview: collect the debt If payment is expected, the company transfers the principal and interest to accounts receivable, removes the face value of the note from notes receivable, and recognizes the interest revenue. Assuming D. Brown dishonors the note but payment is expected, the company records the event by debiting accounts receivable from D. Brown for $2,625, crediting notes receivable for $2,500, and crediting interest revenue for $125....
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This note was uploaded on 11/14/2011 for the course ACCT 1310 taught by Professor Staff during the Fall '10 term at Texas State.

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