Consider the following journal entry:

Which of the following explanations best describes this journal entry?
A) The company buys $10,000 of equipment, pays cash of $4,000, and signs a note for $6,000.
B) The company receives $4,000 in cash and $6,000 in notes payable in exchange for selling $10,000 of equipment.
C) The company buys $10,000 of equipment, pays $4,000 cash, and promises to cancel a debt owed to the company in the amount of $6,000.
D) The company sells $10,000 of equipment, receives $4,000 in cash, and pays off $6,000 it owes on the equipment.

Question

Consider the following journal entry:

Which of the following explanations best describes this journal entry?
A) The company buys $10,000 of equipment, pays cash of $4,000, and signs a note for $6,000. 
B) The company receives $4,000 in cash and $6,000 in notes payable in exchange for selling $10,000 of equipment. 
C) The company buys $10,000 of equipment, pays $4,000 cash, and promises to cancel a debt owed to the company in the amount of $6,000. 
D) The company sells $10,000 of equipment, receives $4,000 in cash, and pays off $6,000 it owes on the equipment.

Quizplus · Accepted Answer

The Answer of Consider the following journal entry:

Which of the following explanations best describes this journal entry?
A) The company buys $10,000 of equipment, pays cash of $4,000, and signs a note for $6,000. 
B) The company receives $4,000 in cash and $6,000 in notes payable in exchange for selling $10,000 of equipment. 
C) The company buys $10,000 of equipment, pays $4,000 cash, and promises to cancel a debt owed to the company in the amount of $6,000. 
D) The company sells $10,000 of equipment, receives $4,000 in cash, and pays off $6,000 it owes on the equipment.

Consider the Following Journal Entry