Question

Grayson Bank agrees to lend the Trust Company $100,000 on January 1.

Trust Company signs a $100,000, 8%, 9-month note.

The entry made by Trust Company on January 1 to record the proceeds and issuance of the note is

a. Notes Payable 100,000 Interest Payable 6,000 Cash 100,000 Interest Expense 6,000

b. Interest Expense 8,000 Cash 92,000 Notes Payable 100,000

c. Cash 100,000 Notes Payable 100,000

d. Cash 108,000 Interest Expense 8,000 Notes Payable 108,000

Answer 1

The entry made by Trust Company on January 1 to record the proceeds and issuance of the note is

Debit Credit

Cash $100,000

Notes Payable $100,000

The right answer is c

Step-by-step explanation:

According to the given data the interest will not be adjusted at the time of loan proceed and issuance of note

Therefore, The entry made by Trust Company on January 1 to record the proceeds and issuance of the note is the following:

Debit Credit

Cash $100,000

Notes Payable $100,000

To record the borrowing