The credit instrument normally requires the debtor to pay interest and extends for time periods of 30 days or longer.
When referring to the present value, it means the sum of all future cash flows discounted using the prevailing market rate of interest for similar notes.
[2] Interest-bearing notes have a specified interest rate payable on top of their face value.
[2] In a journal entry, a dishonored note is one that the maker did not pay by its due date.
The payee should debit Accounts Receivable for the full amount due, credit Notes Receivable for the note's face value, and credit Interest Revenue for the interest earned.