October 30, 2016 admin

Notes Receivable

Assets

NOTES RECEIVABLE ASSET ACCOUNT
1100

ACCOUNT EXPLANATION
Notes receivable from customers.
TRANSACTIONS
  Jrnl. Dr. Cr.
  Note accepted from customer on sale of new vehicle NV
    Notes Receivable 1100
      Sales—New Cars—Retail 3000, etc.
           
  Payment on note received from customer CR
    Cash in Bank—General 1001
      Notes Receivable 1100
             
   Customer note discounted at bank CR
    Cash in Bank—General 1001
    Prepaid Interest 1520
      Notes Receivable 1100
COMMENTS
  • Subsidiary records should support this account. At month end, an aging schedule of unpaid notes should be prepared for management review.
  • Discounts on notes receivable should be charged to Account 1520, Prepaid Interest, and amortized monthly over the term of the note by write-offs to Account 8740, Interest—Excluding Vehicle & Mortgage.
  • To minimize losses on receivables, responsibilities for extension of credit and collection of receivables should be defined, and performance should be reviewed monthly by appropriate dealership management.