Question

Shriver Corp. borrows $25,000 from a bank and signs a two-year promissory note. What accounts will be affected by this transaction and what is the effect?

Answer 1

Answer:

The Accounts affected are :

1. Cash
2. Note Payable

Effect of this transaction is :

1. Increase the Assets of Cash
2. Increase the Liabilities

Explanation:

The entry to record this transaction is :

Cash $25,000 (debit)

Note Payable $25,000 (credit)

Being recognition of Note Payable arising due to signing of a two-year promissory note.