Ross Company Holds a 90-Day, 6 Percent Note for $400

Multiple Choice

Ross Company holds a 90-day, 6 percent note for $400 from one of its customers. The customer fails to pay by the due date. Assume a 360-day year. Which of the following is the correct treatment to record the transaction?

A) Debit Accounts Receivable by $400; credit Notes Receivable by $400
B) Debit Accounts Receivable by $406; credit Notes Receivable by $400, credit Interest Income by $6
C) Debit Revenue by $400; credit Notes Receivable by $400
D) No entry unless payment is received from the customer