Bellingham Company purchased manufacturing equipment for $20,000. Bellingham paid $5,000 in cash and signed a note for the balance. The company debited the Equipment account, credited the Cash account and

Question

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Since Bellingham signed a note (a promise to pay), it created a liability. Therefore, the Cash account was credited (because cash was paid), and the Liability account was credited (because a promise to pay was made). The Equipment account was debited for the cost of the equipment. No other accounts were affected. Therefore, the correct choice is D.

Bellingham Company Purchased Manufacturing Equipment for $20,000