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On the maturity date of a note receivable, the customer does not pay and makes no arrangement for an extension. Which account does the lender debit to record the amount now owed?
ANote receivable
BInterest revenue
CReceivables
DAllowance for receivables
Answer & Solution
Correct answer: C. Receivables
1. The note is void at maturity, so it can no longer hold the balance.
2. The only account left to record the overdue amount is Receivables, which is debited.
3. Note receivable is being credited (closed), not debited, so it is wrong.
4. Interest revenue and the allowance are not used to record the unpaid principal, so both are wrong.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §4.3.2 "Maturity (Due) Date", p.136_
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