Question

Knowledge Check 01 On September 1, Vicario, Inc., borrows $100,000 from First National Bank at 6 percent annual interest. This note is due in 90 days. Prepare the September 1 journal entry for Vicario by selecting the account names from the drop-down menus and entering the dollar amounts in the debit or credit columns.

Answer 1

Answer:

Debit cash for $100,000

Credit cash for $100,000

Explanation:

It should be noted that on September 1, the only transaction that occurred is the receipt of cash by Vicario, Inc. from First National Bank and no interest expenses has been accrued.

Based on this therefore, the journal entry for Vicario on September 1 will appear as follows:

Date        Name of Accounts                  DR ($)                 CR ($)      

Sept. 1     Cash                                       100,000

                    Notes payable                                               100,000

               (To record borrowing from First National Bank.)