Question

Moss County Bank agrees to lend the Sadowski Brick Company $500,000 on January 1. Sadowski Brick Company signs a $500,000, 6%, 9-month note. Recording the proceeds and issuance of the note by Sadowski Brick Company on January 1 includes a(n) Group of answer choices Increase to Cash for $500,000, increase to Interest Expense for $22,500, and an increase to Notes Payable for $522,500. Increase to Cash and to Notes Payable for $500,000. Increase to Cash for $500,000, increase to Interest Expense for $22,500, increase to Notes Payable for $500,000, and an increase to Interest Payable for $22,500. Increase to Interest Expense for $22,500, increase to Cash for $477,500, and an increase to Notes Payable for $500,000.

Answer 1

Increase to Cash and to Notes Payable for $500,000.

Step-by-step explanation:

The journal entry for issuance of the note is shown below:

Cash A/c Dr $500,000

To Note payable $500,000

(Being note is issued)

Since we have to pass the journal entry for issuance of the note so we simply debited the cash account and credited the note payable account

We ignored interest rate and the given months