The purchase of office equipment at a cost of $3,600 with an immediate down payment of $1,000 and agreement to pay the balance within 60 days is recorded by:
A) A debit of $3,600 to Office Equipment, a credit of $1,000 to cash, and a credit of $2,600 to Accounts Payable.
B) A debit of $2,600 to Accounts Receivable, a debit of $1,000 to Cash, and a credit of $3,600 to Office Equipment.
C) A debit of $3,600 to Office Equipment, a credit of $1,000 to Cash, and a credit of $2,600 to Accounts Receivable.
D) None of these choices

Question

Quizplus · Accepted Answer

The total cost of the office equipment is $3,600, but the immediate down payment of $1,000 reduces the amount owed to $2,600. Therefore, the debit to Office Equipment should be $3,600, the credit to Cash should be $1,000, and the credit to Accounts Payable should be the remaining balance of $2,600 to reflect the fact that the company still owes this amount and will pay it within 60 days.

The Purchase of Office Equipment at a Cost of $3,600