Latimer Company borrows $50,000 from the bank and signs a note that is due in three months.How would the company record this payment?
A)Debit Land for $50,000 and credit Notes Payable for $50,000.
B)Debit Cash for $50,000 and credit Notes Payable for $50,000.
C)Debit Notes Payable by $50,000 and credit Cash for $50,000.
D)Debit Cash for $50,000 and credit Accounts Payable for $50,000.
E)Debit Cash for $50,000 and credit Service Revenue for $50,000.

Question

Quizplus · Accepted Answer

The company should record the payment by debiting Cash for the amount received ($50,000) and crediting Notes Payable for the amount owed ($50,000). This will reduce the company's liability on the note.

Latimer Company Borrows $50,000 from the Bank and Signs a Note