Martin's Mail Service purchased equipment for $2,500. Martin paid $500 in cash and signed a note for the balance. Martin debited the Equipment account, credited Cash and

Question

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When Martin signed a note for the balance, it means he agreed to pay the remaining $2,000 in the future. Therefore, this transaction increased Martin's liabilities, which should be credited. The journal entry should be:

Equipment          $2,500
Cash                       $500
Notes Payable    $2,000

Martin's Mail Service Purchased Equipment for $2,500