Final answer:
To record a new note payable in QuickBooks Online, the company would debit cash and credit notes payable. The transaction implies an increase in the company's cash and liabilities. Additionally, the deposit of such funds into a bank has implications for the banking system's money supply due to reserve requirements.
Step-by-step explanation:
When Seattle Bank issues a new 4%, 36-month note payable in the amount of $20,000 to a company, the company must record this transaction in QuickBooks Online. This entry is an addition to an existing note payable. The proper entry would debit cash for the $20,000 received and credit notes payable for the same amount. This transaction reflects an increase in the company's liabilities and its cash balance.
In a broader accounting context, when a bank, such as Singleton Bank, provides a loan to a business-like Hank's Auto Supply, the bank records the loan as an asset on its balance sheet. This is because it will generate interest income over time. The entry on Hank's Auto Supply's books would involve debiting cash and crediting notes payable by the loan amount.
It's also important to understand the impact of this transaction on the banking system. When Hank's Auto Supply deposits the check from Singleton Bank, First National, where the check is deposited, will see an increase in deposits and reserves. However, due to reserve requirements set by the central bank, only a fraction of these deposits can be retained as reserves while the remaining can be loaned out, thereby potentially increasing the money supply in the economy by the multiplier effect.
This monetary detail, though not directly related to recording the transaction in QuickBooks, provides context on the macroeconomic implications of such banking transactions.