Electroid borrowed $85,000 cash from TechCo by signing a promissory note.TechCo's entry to record the transaction should include a ________.
A)debit Accounts Receivable for $85,000
B)credit Accounts Receivable for $85,000
C)debit Note Receivable for $85,000
D)credit Note Receivable for $85,000

Question

Quizplus · Accepted Answer

When Electroid borrows $85,000 cash from TechCo by signing a promissory note, TechCo should debit Note Receivable for $85,000 to acknowledge the amount of cash the company expects to receive in the future from Electroid. This amount is a liability for Electroid and therefore, it should be credited to a liability account like Notes Payable. Accounts Receivable is not accurate since Electroid is not owed money, but rather it owes the money.

Electroid Borrowed $85,000 Cash from TechCo by Signing a Promissory