On June 1, Joes Detective Services borrowed $6,000 in order to help in its compa

Question

On June 1, Joes Detective Services borrowed $6,000 in order to help in its company's operations. It was borrowed with a 60 day note at an annual rate of interest: 12%. Record the entry to show the borrowing of the cash and also when the note was paid back on August 1 (60 days later) On June 1, Joes Detective Services borrowed $6,000 in order to help in its company's operations. It was borrowed with a 60 day note at an annual rate of interest: 12%. Record the entry to show the borrowing of the cash and also when the note was paid back on August 1 (60 days later)

Explanation / Answer

June 1st Borrowed $6,000 in cash

debit

credit

cash

6,000

      borrowings

6,000

debit: increase in assets (cash)
credit: increase in liabilities (borrowings)

Issued a promissory note and received $11,000 in cash

debit

credit

cash

6,000

      notes payable

6,000

debit: increase in assets (cash)
credit: increase in liabilities (notes payable)

debit

credit

cash

6,000

      borrowings

6,000

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