How do you log this entry in the general journal?

"On account" isn't notes receivable. It would say it's a note if it were. "On account" always means either just plain accounts receivable or just plain accounts payable, which you have to figure out by context. Since it's a customer and they owe you, that makes it a receivable, yes, but not a note receivable.

You already appear to know it's receivables. And now you're into merchandising, or back in a note receivable chapter that's utilizing merchandising. Either way, receivables should be old news at this point. What do you always do to the receivable? And if you're selling, you have revenue - Sales. What do you do to revenue accounts?