Question

Taylor Bank lends Guarantee Company $91,759 on January 1. Guarantee Company signs a $91,759, 11%, nine-month note. The entry made by Guarantee Company on January 1 to record the proceeds and issuance of the note is:__________ a. Cash 91,759 Notes Payable 91,759 b. Interest Expense 7,570 Cash 84,189 Notes Payable 91,759 c. Cash 99,329 Interest Expense 7,570 Notes Payable 91,759 d. Cash 103,114 Interest Expense 7,570 Notes Payable 91,759 Interest Payable 3,785

Answer 1

Answer:

a. Cash 91,759 Notes Payable 91,759

Explanation:

The Journal entry is shown below:-

Cash Dr, $91,759

           To Notes payable $91,759

(Being proceeds and issuance of the note is recorded)

To record the proceeds and issuance of the note we simply debited the cash as it increased the assets and we credited the notes payable as it also increased the liabilities

Hence, the first option is correct