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First Define Notes Payable in order we all can know it well, then support us by the accounting wise in order your answer can help some of us in their paith.
Notes payable is an instrument, It is written promise for a stated amount in the Notes for a future defined date.
The entry for Notes payable issued
Supplier/other party-------------Dr
To Note Payable
When the maturity period is finished the entry is,
Note Payable------------Dr
To Bank
In sample answer , Notes Payable means we issued checks but with date not same time we wrote the check , Then we record it on accural basis and once its date came up and found in the bank then we can cerdit the accural and debit the account for the operation belongs to it.
Notes Payable means a written promises to pay a specified amount on a demand or at a certain time.
Accounting entry for notes payable:-
1) at the time of signing the note:
Cash Account.... Dr. $1,000
Notes Payable.....Cr. $1000.
2) at the time of re-payment.
Notes Payable....Dr. $1,000.
Cash......Cr. $1,000.
If interst is applicable we have to include interest also in accounting entry, so the entry will be:-
1) Interst Account(Expense).... Dr. $10.
Interest Payable....Cr $10.
At the time of Interst Payment entry will be:
2) Interst Payable....Dr $10
Cash.....Cr $10
