The entry is required in the company's accounts debit cash ;Credit notes receivable and interest revenue.
If a business frequently trades in goods or services for notes, it would likely add a debit column for notes receivable to the sales book so that the general journal would not need to be used to record these transactions. It is also possible to build a separate subsidiary ledger for notes payable. A corporation should create a separate provision for bad debts account specifically for notes receivable if the quantity of notes receivable is substantial.
A note is considered to be honored when the maker pays it in accordance with the terms written down on it.
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