Grayson Bank agrees to lend the Trust Company $104,980 on January 1. Trust Company signs a $104,980, 6%, 9-month, interest-bearing note. The entry made by Trust Company on January 1 to record the proceeds and issuance of the note is:

Cash $104,980 (debit)

Note Payable : Grayson Bank $104,980 (credit)

Explanation:

When the note is issued, recognize the Assets of Cash and also recognize the Liability : Note Payable.

The Journal entry to record the transaction will be:

Cash $104,980 (debit)

Note Payable : Grayson Bank $104,980 (credit)