Accounting.journal entry

DisneyWorld · #1 Mar 17, 2007, 07:28 PM

I need to make the following journal entry, how would I go about doing it?
Thanks!

My company borrowed cash from a bank, 500,000 with an interest rate of 6% not due in 4 years.

Fairjer · Mar 17, 2007, 08:19 PM

What cash account did you deposit the money into at the bank?
What kind of accounting software are you using?

Without knowing this. In general terms you are going to DEBIT an asset or cash account or whatever account you are going to use this 500,000 for, which as an example would be your Operating Cash account or an interest bearing cash account such as savings.

The Credit is going to be a long term liability account such as "Notes Payable" or similar.

I would suggest also tracking the interest paid on this loan through a separate liability account such as "Interest on Long term Loans," once you begin making monthly installments on the loan.

DisneyWorld · Mar 17, 2007, 08:29 PM

thank you so much!! It's for a class problem and I am so clueless on all of this!!!

Quote:

Originally Posted by Fairjer

What cash account did you deposit the money into at the bank?
What kind of accounting software are you using?

Without knowing this. In general terms you are going to DEBIT an asset or cash account or whatever account you are going to use this 500,000 for, which as an example would be your Operating Cash account or an interest bearing cash account such as savings.

The Credit is going to be a long term liability account such as "Notes Payable" or similar.

I would suggest also tracking the interest paid on this loan through a separate liability account such as "Interest on Long term Loans," once you begin making monthly installments on the loan.

CaptainForest · Mar 17, 2007, 08:31 PM

Quote:

Originally Posted by DisneyWorld

thank you so much!! It's for a class problem and I am so clueless on all of this!!!

Disney,

As Fairjer said, you Debit Cash for 500,000

Why? because your company is receiving the asset.

You need an offsetting credit entry, which is to notes payable, since you OWE this 500,000 to them.

Dr. Cash 500,000
Cr. Notes Payable 500,000

DisneyWorld · Mar 17, 2007, 08:33 PM

thank you so much! I think I understand the basics, but what threw me off was the notes payable part. 4 problems down and 9 left, lol!

Quote:

Originally Posted by CaptainForest

Disney,

As Fairjer said, you Debit Cash for 500,000

Why? because your company is receiving the asset.

You need an offsetting credit entry, which is to notes payable, since you OWE this 500,000 to them.

Dr. Cash 500,000
Cr. Notes Payable 500,000



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