Question

Which of the following journal entries correctly records the loan of $500,000 and acceptance of the note receivable on April 1, 2024?

A) Debit Cash $500,000, Credit Notes Receivable $500,000
B) Debit Notes Receivable $500,000, Credit Cash $500,000
C) Debit Cash $500,000, Credit Loan Payable $500,000
D) Debit Loan Payable $500,000, Credit Cash $500,000

Answer 1

Option B) Debit Notes Receivable $500,000, Credit Cash $500,000 is the correct journal entry to record the loan and acceptance of the note receivable.

Step-by-step explanation:

The correct journal entry to record the loan of $500,000 and acceptance of the note receivable on April 1, 2024 is option B) Debit Notes Receivable $500,000, Credit Cash $500,000.

In this entry, the Notes Receivable account is debited to record the loan, representing the increase in assets. Cash is credited to reflect the increase in cash due to the loan received. This entry accurately records the loan and its acceptance.