Answer:
the journal entry should be:
Dr Notes receivable 9,500
Cr Accounts receivable 9,500
Explanation:
Since Sheridan Company owed money to Skysong ($9,500), Skysong recorded that amount as an account receivable. Since the note receivable replaces the account receivable, the accounts receivable must be credited (assets decrease when credited).
If note is collected on time, the journal entry should be:
Dr Cash 9,785
Cr Notes receivable 9,500
Cr interest revenue 285
