Jasper's entry to record the transaction should be:

A) Debit Notes Receivable for $25,000; credit Cash $25,000.
B) Debit Accounts Receivable $25,000; credit Notes Receivable $25,000.
C) Debit Cash $25,000; credit Notes Receivable for $25,000.
D) Debit Notes Payable $25,000; credit Accounts Payable $25,000.
E) Debit Notes Receivable $25,000; credit Sales $25,000.

Question

timii odunfa · Accepted Answer

Final Answer : A, Explanation :  When Jasper loans money to Clayborn Co., he should record the loan as a note receivable because it is a formal agreement to receive cash in the future. The correct entry is to debit Notes Receivable for the loan amount, indicating an increase in assets, and credit Cash for the same amount, indicating a decrease in assets.

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