Notes payable is recorded as a debit entry. The cash account is credited, and the balance sheet records it as a liability. That means they're recorded as debit in your balance sheet rather than as credit.
What is the note payable entry in the journal?
- As you pay back the loan, you'll journalize the notes payable as a debit entry and the cash account as a credit entry. As a liability, it appears on the balance sheet. However, you must additionally calculate the interest rate once a payment is made and record this amount in the interest cost and interest payable accounts.
- Notes payable on the balance sheet refer to debt or other borrowing. They typically last longer, usually longer than a year. They appear as a liability on the balance sheet, just as accounts payable.
- Notes payable is recorded as a debit entry. The cash account is credited, and the balance sheet records it as a liability. That means they're recorded as debit in your balance sheet rather than as credit.
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