Consider the following journal entry: $$\begin{array} { c r r }
\text { Software } & 18,000 & \
\quad \text { Cash } & & 7,200 \
\text { Note Payable } & & 10,800
\end{array}$$ Which of the following explanations best describes this journal entry?
A)The company buys $18,000 of software,pays cash of $7,200,and signs a note for $10,800.
B)The company receives $7,200 in cash and $10,800 in notes payable in exchange for selling $18,000 of software.
C)The company buys $18,000 of software,pays $7,200 cash,and promises to cancel a debt owed to the company in the amount of $10,800.
D)The company sells $18,000 of software,receives $7,200 in cash,and pays off $10,800 it owes on the software.

Question

Consider the following journal entry: $$\begin{array} { c r r } 
\text { Software } & 18,000 & \
\quad \text { Cash } & & 7,200 \
\text { Note Payable } & & 10,800
\end{array}$$ Which of the following explanations best describes this journal entry?
A)The company buys $18,000 of software,pays cash of $7,200,and signs a note for $10,800.
B)The company receives $7,200 in cash and $10,800 in notes payable in exchange for selling $18,000 of software.
C)The company buys $18,000 of software,pays $7,200 cash,and promises to cancel a debt owed to the company in the amount of $10,800.
D)The company sells $18,000 of software,receives $7,200 in cash,and pays off $10,800 it owes on the software.

Quizplus · Accepted Answer

The journal entry shows an increase in Software (an asset) by $18,000, a decrease in Cash (another asset) by $7,200, and an increase in Note Payable (a liability) by $10,800. This indicates the company purchased software, paid part of the cost in cash, and took on a note payable for the remainder.

Consider the Following Journal Entry Software 18,000 Cash 7,200 Note Payable 10,800\begin{array} { c r r } \text { Software } & 18,000 & \\\quad \text { Cash } & & 7,200 \\\text { Note Payable } & & 10,800\end{array} Software Cash Note Payable ​18,000​7,20010,800​

Consider the Following Journal Entry $\begin{array} { c r r } \text { Software } & 18,000 & \\\quad \text { Cash } & & 7,200 \\\text { Note Payable } & & 10,800\end{array}$