An electric device delivers a current of [tex]$15.0 A$[/tex] for 30 seconds. How many electrons flow through it?
Answer (1)
Debit Cash for the amount received.
Credit Notes Payable to recognize the liability.
The issuance of the note is recorded as Cash (Debit) and Notes Payable (Credit) for $170 , 000 .
The journal entry reflects the company's increased cash and its obligation to repay the note. Cash (Debit) and Notes Payable (Credit) for $170 , 000
Explanation
Issuance of the Note On December 1, Keesha Company borrows $170,000 cash by signing a 120-day, 8% note. We need to record the issuance of the note. This involves an increase in cash (debit) and an increase in notes payable (credit).
Journal Entry Details The journal entry will debit Cash and credit Notes Payable for the amount of the loan, which is $170,000.
Examples
When a company needs short-term financing, it can issue a note payable. This is similar to taking out a loan from a bank. The company receives cash immediately and promises to repay the principal amount along with interest at a later date. Understanding how to record these transactions is crucial for accurate financial reporting.
