IL Notes Receivable A. -a written promise to pay a specified amount of money either an denmand or at a definite future date, usually bearing interest. B. Definitions 1. 2. 3. 4. C. Calculating Interest 1. 2. 3. D. Entry: DR -the specified amount of money on the note -the one who signs and promises to pay the note -the person to whom the note is payable -the day the mone must be repaid x Interest is the cost of borrowing the money (stated in terms of one year) Interest= Banker's Rule: a year has 360 days for calculations(12 mo. x 30 days ea.) E. Honoring a Note x CR III. DR. 2. CR F. Recording a Dishonored Note 1. DR. 2. CR. G. End-of-Period Interest Adjustment 1. Accrued Interest DR. CR. CR. CR. Accounts Receivable Turnover Ratio A. Calculated as: B. Indicates how often the company converted its average accounts receivable balance into cash during the year and how well management is doing in graming credit