Campus Computers obtains a $25,000 6-month loan from a bank. What is the journal entry?
Cash (A) (inc) $25,000
…Loans Payable (L) (dec) $25,000
Cash (A) (inc) $25,000
…Loans Payable (L) (inc) $25,000
Cash (A) (inc) $25,000
…Accounts Payable (L) (inc) $25,000
Loans Payable (L) (inc) $25,000
…Cash (A) (inc) $25,000
Correct answer. The increase in Cash, an Asset account, should be debited on the left side. The obligation to repay the 6-month loan leads to an increase in Loans Payable, a Liability account, and the increase of liability should be credited on the right side.
