Question

On April 10, Caryâs Carpet Cleaning, Inc. borrows $15,000 from a bank, depositing those funds in its bank account and signing a formal agreement to repay the loan in one year. Prepare the appropriate journal entry for this transaction. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.)
Required:
Record the $15,000 bank borrowing made by signing a formal agreement to repay the loan in one year

Answer 1

Answer:

Cash A/c Dr $15,000

  To Notes payable A/c $15,000

(Being the bank borrowing through a note payable is recorded)

Explanation:

The journal entry is shown below:

Cash A/c Dr $15,000

  To Notes payable A/c $15,000

(Being the bank borrowing through a note payable is recorded)

This transaction increases the cash balance so the cash account should be debited and the note payable account should be credited as it creates a liability which is to be reflected in the balance sheet