Question

The journal entry to record the borrowing of cash and the signing of a note payable involves: Multiple Choice

1. A debit to note payable and a credit to cash.
2. Debits to cash and interest expense and a credit to note payable.
3. A debit to cash and a credit to note payable.
4. All of these answer choices are incorrect.

Answer 1

3. A debit to cash and a credit to note payable.

Step-by-step explanation:

The journal entry to record the note payable is shown below"

Cash A/c Dr XXXXX

To Note payable A/c XXXXX

(Being the note payable is recorded)

Since the cash is borrowed so we debited the cash account and the note payable is signed so we credited the note payable account. Both the accounts contain the same balance