The journal entry to record the conversion of an $550 accounts payable to a notes payable would be:
A) Cash 550 Notes Payable 550
B) Notes Receivable 550 Notes Payable 550
C) Notes Payable 550 Cash 550
D) Accounts Payable 550 Notes Payable 550

Question

Quizplus · Accepted Answer

To record the conversion of accounts payable to notes payable, we need to debit accounts payable account and credit the notes payable account. Hence, option D is the correct answer. Option A is incorrect because it involves cash and not applicable in this scenario. Option B is incorrect as it involves notes receivable which is not relevant in this situation. Option C is also incorrect as it involves cash and not applicable here.

The Journal Entry to Record the Conversion of an $550