notes payable accounting the debit is to cash as the note payable was issued in respect of new borrowings issued to extend payment terms had the note payable been issued in respect of an overdue supplier account in order to extend the terms of payment then this would have converted an accounts payable to a note payable and the debit would be to accounts payable as escrow account record keeping requirements escrow account & record keeping requirements act of 2000 revised february 2015 what is an interest bearing liability on a balance sheet interest bearing debts like loans trade credit bonds and promissory notes must be handled differently than other debts like wages how they are entered on a balance sheet and how they are prioritized depends on when the debt is due and when the interest must be paid to the lender – the journal entry to record the payment of an interest-bearing note is
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