Question

Moss County Bank agrees to lend the Sandhill Co. $635000 on January 1. Sandhill Co. signs a $635000, 6%, 9-month note. The entry made by Sandhill Co. on January 1 to record the proceeds and issuance of the note is

a

Interest Expense 28575
Cash 606425
Notes Payable 635000
b

Cash 635000
Interest Expense 28575
Notes Payable 635000
Interest Payable 28575
c

Cash 635000
Notes Payable 635000
d

Cash 635000
Interest Expense 28575
Notes Payable 663575

Answer 1

Cash 635000

Notes Payable 635000

Explanation:

As per the data given in the question,

The journal entry for issuance of the note is

Cash $635,000

To Notes payable $635,000

(Being the issuance of the note is recorded)

Here, Cash will increase the assets value and Notes payable will increase the liabilities value so both the accounts are debited and credited respectively.

Therefore, option C is correct