Financial Accounting Fundamentals | Online Course Support

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.

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