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    lopezap1's Avatar
    lopezap1 Posts: 13, Reputation: 1
    New Member

    Jul 20, 2012, 04:31 PM
    Debit and credit
    Bank lends money to customer on six month note. The entry to record the issuance of the note is:
    A - debit note rec'able and credit credit service rev
    B - debit service rev and credit note rec'able
    C - debit note rec'able and credit cash
    D - debit cash and credit note rec'able

    I thought it would be D
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
    Ultra Member

    Jul 21, 2012, 01:54 PM
    Based on the possible answers I assume the journal entry by the bank will be:
    Debit Notes Receivable because a customer signed a note owing the bank money
    Credit Cash because the bank gave the customer money in exchange for the note.

    The journal entry by the customer will be:
    Debit Cash because the customer received cash from the bank
    Credit Notes Payable because the customer signed a note for the cash by the bank

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