McNamee Juices sells products in the health-food industry. Mcnamee sold Johnny Mac merchandise for $5,000 on account. Johnny Mac ran into a cash crunch and was able to pay only $1,200 in the prescribed period. Both parties agreed to satisfy the remaining balance with a six-month note, at 13% interest, all payable at the end of the note. Please record the appropriate journal entry establishing the note on McNamee’s books.
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The customer still owes ($5,000 - $1,200) = $3,800 You just need to transfer that amount from A/R to a Note Receivable. Debit 'Notes Receivable' $3,800 Credit 'Accounts Receivable' $3,800 ------------------- The interest doesn't come into play when establishing the note.
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