On April 1, Wildhorse Company borrows $120,000 from West Bank by signing a 6-month, 6%, interest-bearing note. Prepare the necessary entries below associated with the note payable on the books of Wildhorse Company. (a) Prepare the entry on April 1 when the note was issued. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

The entry to record the issuance of the note payable by Wild horse Company on April 1 will be:

April 1. Cash           $120,000

           Notes Payable             $120,000

Debit to Cash: Represents the increase in cash received from borrowing $120,000.

Credit to Notes Payable: Indicates the creation of the note payable, acknowledging the company's obligation to repay the borrowed amount to West Bank.

 Debiting Cash reflects the inflow of cash into Wild horse Company as a result of the loan. - Crediting Notes Payable creates a liability on the company's books, reflecting the company's obligation to repay the borrowed amount.

In accounting, it's important to understand the dual aspect of transactions, which is the basis of double-entry bookkeeping. Every financial transaction affects at least two accounts: one account is debited, and another account is credited. The total amount debited must always equal the total amount credited.

In this case, the two accounts affected are:

1. Cash (an asset account): Increases because the company received money from the bank.

2. Notes Payable (a liability account): Increases because the company has created an obligation that it must repay in the future.

Interest Expense: It's also important to note that, since the note is interest-bearing at a rate of 6% for 6 months, there will be additional entries required to account for the interest expense over the term of the note. Interest expense is typically recorded periodically (e.g., monthly, quarterly), and in this case, it may be recorded monthly or at the end of the 6-month period when the note matures.

The formula for calculating the interest is:

Interest = Principal x Interest Rate x Time (in years)

For this scenario, the calculation would be:

Interest = $120,000 x 6% x (6/12)

Interest = $3,600.

This calculated interest will need to be recorded as an expense and as an additional liability (Interest Payable) when it's due or it can be accrued periodically depending on the company's accounting policy.