The journal entry a company uses to record the issuance of a note for the purpose of converting an existing account payable would be
A) debit Cash; credit Accounts Payable
B) debit Accounts, Payable; credit Cash
C) debit Cash; credit Notes Payable
D) debit Accounts Payable; credit Notes Payable

Question

Quizplus · Accepted Answer

When a company converts an existing account payable into a note payable, it debits Accounts Payable to remove the liability from the books and credits Notes Payable to record the new liability.

The Journal Entry a Company Uses to Record the Issuance