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Question - On August 31, 2014, Kuda Autoparts Company sold $8,000 worth of parts to Menchions Repair Company. The terms of the sale were n/90. Kuda's receivable policy is to start charging interest of 7% (annually) on all balances over 90 days. Interest is accrued monthly.
It is now December 31, 2014, and Menchions Repair Company has not paid the outstanding bill. Menchions Repair's owners have agreed to sign a 3-month note receivable for the balance owing on their account.
Prepare any journal entries required to be made by Kuda Autoparts Company at December 31, 2014.
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