Giorgio Italian Market bought $11,000 worth of merchandise from Food Suppliers and signed a 45-day, 8% promissory note for the $11,000. Food Supplier's journal entry to record the sales transaction is:

Question

Ingrid Pearson

Business

12 December, 18:26

Giorgio Italian Market bought $11,000 worth of merchandise from Food Suppliers and signed a 45-day, 8% promissory note for the $11,000. Food Supplier's journal entry to record the sales transaction is:

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Quinn Vaughan · Answer 1

Dr. Cr.

Purchases / Inventory $11,000

Promissory Note Payable $11,000

Explanation:

Promissory note is a signed document which contains a written promise for payment of stated amount to specific person or bond holder on demand or specified date.

In this case the purchases are made and a promissory note of $11,000 is signed for 45 days at 8% annual rate.

This entry will be recorded as the purchases or Inventory are debited and as promissory note is a short term liability so, promissory note payable is credited resulting increase in inventory as well increase in current liability.