Which of the following transactions is recorded with a debit to Cash and a credit to Notes Receivable?

• A. Issuance of a note receivable to a customer
• B. Borrowing cash by signing a new note payable
• C. Payment of a note payable to a lender
• D. Collection of a note receivable at maturity

Answer: (D)

Verified step by step guidance

1. Step 1: Understand the nature of the transaction. A debit to Cash indicates an increase in the company's cash account, while a credit to Notes Receivable indicates a decrease in the company's asset account for notes receivable.
2. Step 2: Recall that Notes Receivable represents amounts owed to the company by customers or other parties, typically documented in a formal agreement. When the company collects cash at maturity, the note receivable is settled, reducing the Notes Receivable account.
3. Step 3: Analyze the transaction described in the problem. The collection of a note receivable at maturity involves receiving cash from the customer or debtor, which increases the Cash account (debit) and decreases the Notes Receivable account (credit).
4. Step 4: Compare the other options provided in the problem. Issuance of a note receivable to a customer would involve creating a new Notes Receivable account (debit) and possibly crediting another account like Sales Revenue. Borrowing cash by signing a new note payable would involve a debit to Cash and a credit to Notes Payable. Payment of a note payable to a lender would involve a debit to Notes Payable and a credit to Cash.
5. Step 5: Conclude that the correct transaction matching a debit to Cash and a credit to Notes Receivable is the collection of a note receivable at maturity, as this reflects the settlement of the note and receipt of cash.