A company bought merchandise worth $800 on account on September 16, with terms n/30. The supplier agreed to accept a 30-day, 6 percent, $800 note in settlement of the account. Which of the following journal entries records the issuance of the note in the general journal of the purchasing company?
A) Debit Accounts Receivable by $820; credit Notes Payable by $820
B) Debit Supplier by $820; credit Notes Receivable by $820
C) Debit Accounts Payable by $800; credit Notes Receivable by $800
D) Debit Accounts Payable by $800; credit Notes Payable by $800

Question

Quizplus · Accepted Answer

The correct journal entry to record the issuance of a note in settlement of an account payable involves debiting (decreasing) Accounts Payable and crediting (increasing) Notes Payable for the amount of the note, which is $800 in this case.

A Company Bought Merchandise Worth $800 on Account on September