JournaldrillBorrowing with a note
A journal entry exercise from Journaldrill. Solve it with an account picker and debit and credit fields in your browser, and it is checked the moment you submit.
The task
On March 1, Tallgrass Bakery borrows $50,000 from its bank by signing a 6-month, 8% note payable. Interest is due at maturity. Record the borrowing on March 1.
What this exercise teaches
The bakery receives $50,000 and owes the bank a $50,000 note. No interest has accrued yet; the $50,000 x 8% x 6/12 = $2,000 of interest will be recognized over the life of the note.
A hint if you get stuck
On the day of borrowing only the cash received and the note itself are recorded.
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