A business purchases equipment by paying cash of $8,000 and issuing a note payable of $12,000.Which of the following occurs?

Question

Quizplus · Accepted Answer

When a business purchases equipment by paying cash of $8,000 and issuing a note payable of $12,000, the equipment account will be debited for the total cost of equipment, which is $20,000 ($8,000 cash + $12,000 note payable). The cash account will be credited for $8,000, which is the amount of cash paid, and the notes payable account will be credited for $12,000, which is the amount of the note that will be paid later. Therefore, choice B is the best option.

A Business Purchases Equipment by Paying Cash of $8,000 and Issuing