Question

On july 1, shady creek resort borrowed $250,000 cash by signing a 10-year, 8% installment note requiring equal payments each june 30 of $37,258. what is the appropriate journal entry to record the issuance of the note? debit cash $250,000; debit interest expense $37,258; credit notes payable $287,258. debit notes payable $250,000; credit cash $250,000. debit cash $37,258; credit notes payable $37,258. debit cash $250,000; credit notes payable $250,000. debit cash $287,258; credit interest payable $37,258; credit notes payable $250,000.

Answer 1

Answer:

debit cash $250,000; credit notes payable $250,000

Explanation:

July 1, journal entries should be:

• Dr Cash account 250,000
• Cr Notes Payable account 250,000

Since cash is an asset account and it increases (the company receives money), it should be debited.

Since notes payable is a liability account and it increases, it should be credited.