Electron borrowed $75,000 from TechCom by signing a promissory note and pledging $85,000 in accounts receivable as security. TechCom's entry to record the transaction should include a
A) Debit to Notes Receivable for $75,000
B) Debit to Accounts Receivable for $75,000
C) Credit to Notes Receivable for $75,000
D) Debit Notes Payable for $75,000
E) Credit to Sales for $75,000

Question

Quizplus · Accepted Answer

TechCom is receiving a promissory note from Electron, meaning that they are loaning money to Electron. Thus, TechCom should debit Notes Receivable for the amount of the loan, which in this case is $75,000.

Electron Borrowed $75,000 from TechCom by Signing a Promissory Note