The journal entry used to record the issuance of a discounted note for the purpose of borrowing funds for the business is A debit Cash and Interest Expense; credit Notes Payable B debit Notes Payable; credit Cash C debit Accounts Payable;credit Notes Payable D debit Cash and Interest Payable; credit Notes Payable

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The journal entry used to record the issuance of a discounted note for the purpose of borrowing funds for the business is A debit Cash and Interest Expense; credit Notes Payable B debit Notes Payable; credit Cash C debit Accounts Payable;credit Notes Payable D debit Cash and Interest Payable; credit Notes Payable

Answer 1

The correct journal entry to record the issuance of a discounted note for borrowing funds is:**D debit Cash and Interest Payable; credit Notes Payable**Here's the explanation:- When a business issues a discounted note, it receives cash less than the face value of the note because the interest is deducted upfront. - The entry involves debiting Cash for the amount received and debiting Interest Payable for the interest that will be paid over the life of the note.- The credit is made to Notes Payable for the face value of the note.This reflects the liability for the full amount of the note while recognizing the interest expense that will accrue over time.

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