Question

Company A and Company B each borrow $2,200 from the bank. Company A signed a 60-day, 12% note. Company B signed a 90-day, 10% note. How will each of these companies record these events in their respective general journals on the day the money was borrowed?

Answer 1

Answer:

Explanation:

The journal entries are shown below:

For Company A

Cash A/c Dr $2,200

      To Notes payable A/c $2,200

(Being the cash is received for issuing the note)

For Company B

Cash A/c Dr $2,200

      To Notes payable A/c $2,200

(Being the cash is received for issuing the note)

We debited the cash account and credited the notes payable account so that correct posting can be done