Question

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on january 1, mm company borrows $420,000 cash from a bank and in return signs an 8% installment note for five annual payments of $105,192 each.
qs 10-14 (algo) issuance and interest for installment note lo c1
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prepare the journal entry to record issuance of the note.
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journal entry worksheet
< 1 >
record the issuance of the note.
note: enter debits before credits.
date general journal debit credit
january 01
record entry clear view general journal

Explanation:

Step1: Identify cash receipt

When the company borrows cash, Cash (an asset) increases, so we debit Cash.
$\text{Debit Cash} = \$420,000$

Step2: Identify liability incurred

The note signed represents a liability (Notes Payable), which increases, so we credit Notes Payable.
$\text{Credit Notes Payable} = \$420,000$

Answer:

Date	General Journal	Debit	Credit
January 01	Notes Payable		420,000