The journal entry to record the purchase of equipment for a $100 cash down payment and a balance of $400 due in 30 days would include:
A)a debit to Equipment for $100 and a credit to Accounts Payable for $400.
B)a debit to Equipment for $100 and a credit to Cash for $100.
C)a debit to Equipment for $500, a credit to Cash for $100, and a credit to Accounts Payable for
$400.
D)debit to Equipment for $500 and a credit to Cash for $500.

Question

Quizplus · Accepted Answer

The correct journal entry to record the purchase of equipment with a part cash payment and the balance on credit involves debiting the Equipment account for the total purchase amount ($500) to reflect the increase in assets. Then, credit Cash for the amount paid ($100) to reflect the decrease in cash, and credit Accounts Payable for the remaining balance ($400) to show the increase in liabilities.

The Journal Entry to Record the Purchase of Equipment for a $100