On May 15, Winterz Company Received a 90-Day, 10 Percent

Multiple Choice

On May 15, Winterz Company received a 90-day, 10 percent note from its customer for $5,000. Which of the following journal entries record the receipt of payment on the due date from the customer? Assume a 360-day year.

A) Debit Accounts Receivable by $5,125; credit Notes Receivable by $5,000, credit Interest Income by $125
B) Debit Cash by $5,125; credit Notes Receivable by $5,000, credit Interest Income by $125
C) Debit Cash by $5,125; credit Notes Receivable by $5,125. No separate entry is required for interest.
D) Debit Cash by $4,875; credit Notes Receivable by $4,875. Interest is recorded before maturity.