Notes Payable

Question 1

what is note

Answer 1

company borrows money from the bank. like a agreement or a contra account

Question 2

loan taken out, what’s the journal entry

Answer 2

Debit cash
Credit Notes Payable

Question 3

what does the term note mean

Answer 3

there is some interest involved that is related to the liability

Question 4

whats the formula for interest

Answer 4

Principal * Interest rate * Fraction of year

Question 5

when interest is paid on note, whats the journal entry

Answer 5

Debit Interest Expense
Credit Cash or Interest payable

Question 6

prinicpal amount of note is paid to bank, journal entry

Answer 6

Debit Notes Payable
Credit cash

Question 7

Amount related to last interest payment on note, whats the journal entry

Answer 7

Debit Notes Payable
Debit Interest Expense
Credit Cash