Q43. Borrowings
Entity A borrowed $20,000 from a bank and received the full amount in cash. The loan is due in 6 months.
Prepare a journal entry to record this transaction.
A43. Increases in borrowings are recorded on the credit side.
| Debit | Credit | |
| Cash | 20,000 | |
| Short-term borrowings | 20,000 |
[Exercise]
$60,000 borrowed from a bank was deposited in a checking account of Entity B. The loan is due 3 years later.
| Debit | Credit | |
| Bank deposits | 60,000 | |
| Long-term borrowings | 60,000 |
[Note]
Borrowings due after 3 years are recorded as long-term borrowings.