Question

On March 1, 2018, Lewis Services issued a 6% long-term notes payable for $18,000. It is payable

over a 3-year term in $6000 principal installments on March 1 of each year, beginning March 1, 2019.
Which of the following entries needs to be made on March 1, 2018?
A) Long-Term Notes Payable 6000
Cash 6000
B) Cash 18,000
Long-Term Notes Payable 18,000
C) Current Portion of Long-Term Notes Payable 18,000
Long-Term Notes Payable 18,000
D) Long-Term Notes Payable 18,000
Accounts Payable 18,000

Answer 1

B) Cash 18,000

Long-Term Notes Payable 18,000

Step-by-step explanation:

The only records that Lewis Services should make on March 1 regarding the issuing of the long term notes payable are:

• Dr Cash 18,000 (since Cash is an asset account, when it increases it should be debited)
• Cr Long Term Notes Payable 18,000 (since Long Term Notes Payable is an liability account, when it increases it should be credited)