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Homework answers / question archive / Electron borrowed $75,000 cash from TechCom by signing a promissory note

Electron borrowed $75,000 cash from TechCom by signing a promissory note

Management

Electron borrowed $75,000 cash from TechCom by signing a promissory note. TechCom’s entry to record the transaction should include a:

  1. Debit to Notes Receivable for $75,000
  2. Debit to Accounts Receivable for $75,000
  3. Credit to Notes Receivable for $75,000
  4. Debit Notes Payable for $75,000
  5. Credit to Sales for $75,000

 

 

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Answer: a . Debit to Notes Receivable for $ 75,000

For TechCom , promissory note , will be treated as notes receivable , as it will be repaid by Electron ,on specified date of maturity, hence at the time of issue of promissory note , notes receivable account (asset) , will be increased , and cash account will be decreased.

 

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