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Recording the Issuance of an Interest-Bearing Note Payable On June 12 Franks Lobster
Chapter 26, Problem 26-3(choose chapter or problem)
Recording the Issuance of an Interest-Bearing Note Payable
On June 12 Frank’s Lobster Pound issued a $9,000, 120-day, 12% note payable to American Bank of Commerce.
1. Which account is debited? What is the debit amount?
2. Which account is credited? What is the credit amount?
3. What is the classification of each account?
4. What is the maturity value of the note?
Questions & Answers
QUESTION:
Recording the Issuance of an Interest-Bearing Note Payable
On June 12 Frank’s Lobster Pound issued a $9,000, 120-day, 12% note payable to American Bank of Commerce.
1. Which account is debited? What is the debit amount?
2. Which account is credited? What is the credit amount?
3. What is the classification of each account?
4. What is the maturity value of the note?
ANSWER:Step 1 of 5
Notes payable refers to a promissory note issued by a company to creditors or banks for obtaining the loan. These are reported under the liabilities section on the balance sheet.