Your company converted an existing account receivable in the amount of $5,000 to a note receivable to allow an extended payment period. The note is due in one year and includes an annual interest rate of 5%. The customer repays the principal at the maturity date. The entry to record the receipt of the principal includes a debit to:
A. Cash and credit to Notes Receivable.
B. Cash and credit to Interest Receivable.
C. Notes Receivable and credit to Cash.
D. Notes Receivable and credit to Accounts Receivable.
Answer: A
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