Moss County Bank agrees to lend the Sandhill Co. $455000 on January 1. Sandhill Co. signs a $455000, 6%, 9-month note. The entry made by Sandhill Co. on January 1 to record the proceeds and issuance of the note is:

See below

Explanation:

The journal entry for the issuance of the note proceed is shown below;

Cash A/c Dr $455,000

To Notes payable A/c Cr $455,000

(Being the issuance as well as proceeds of the note that is recorded)

Cash account is debited because it is increasing and any increase in asset is debited. Also, the note will become payable which leads to increase in liability and an increase in liability is credited hence why note payable is credited.

• Note that other things like interest rate, duration are not considered because we were asked to pass the journal entry for the issues of notes not for any interest expense, reason why it was ignored.

the correct answer is b.)