Question

On April 1, Wildhorse Company borrows $120,000 from West Bank by signing a 6-month, 6%, interest-bearing note. Prepare the necessary entries below associated with the note payable on the books of Wildhorse Company. (a) Prepare the entry on April 1 when the note was issued. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Answer 1

Answer:

Cash Dr $120,000

   To Note payable $120,000

(Being the issued of note payable is recorded)

Explanation:

The journal entry is shown below:

On April 1

Cash Dr $120,000

   To Note payable $120,000

(Being the issued of note payable is recorded)

For recording this entry we debited the cash as it increased the cash balance and at the same time it also increased the liabilities so liabilities is also increased so that the issuance of the note payable could be recorded