medium · Financial Accounting accounting-cycle-financial-statements
Silverton Corp. received a bank statement showing a credit for $1,025 representing a note collected by the bank on the company's behalf ($1,000 principal and $35 interest, less a $10 collection fee).
Which entry should Silverton make?
- Debit Notes Receivable $1,000; Credit Cash $1,000 to reverse the note balance.
- Debit Cash $1,025; Debit Collection Fee Expense10; Credit Notes Receivable $1,000; Credit Interest Revenue35
- Debit Cash $1,035; Credit Notes Receivable $1,000; Credit Interest Revenue $35, omitting the bank's fee entirely.
- Debit Cash $1,000; Debit Interest Revenue25; Credit Notes Receivable $1,025 using the wrong principal.
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