The journal entry to record the conversion of an $4,700 accounts payable to a notes payable would be:
A) Cash 4,700 Notes Payable 4,700
B) Notes Receivable 4,700 Notes Payable 4,700
C) Notes Payable 4,700 Cash 4,700
D) Accounts Payable 4,700 Notes Payable 4,700

Question

Quizplus · Accepted Answer

To record the conversion of an accounts payable to a notes payable, we need to debit the accounts payable account and credit the notes payable account. Therefore, the correct journal entry would be Accounts Payable 4,700 and Notes Payable 4,700. Option D is the only choice that correctly reflects this journal entry. Option A is incorrect as it involves cash which is not involved in the conversion of accounts payable to notes payable. Option B is incorrect as it involves notes receivable which is not correct in our scenario. Option C is incorrect as it debits notes payable instead of accounts payable which is the account that needs to be debited.

The Journal Entry to Record the Conversion of an $4,700