Bear Essentials borrowed $50,000 from Stacks Bank and signed a promissory note.What entry should Bear Essentials record?
A)Debit Cash,$50,000;Credit Notes Receivable,$50,000.
B)Debit Notes Receivable,$50,000;Credit Cash,$50,000.
C)Debit Cash,$50,000;Credit Notes Payable,$50,000.

Question

Quizplus · Accepted Answer

When a company borrows money and signs a promissory note, it receives cash, so it should debit Cash to increase its asset. The obligation to repay the loan is a liability, so it should credit Notes Payable to increase its liabilities.

Bear Essentials Borrowed $50,000 from Stacks Bank and Signed a Promissory