Teasdale Printing Services purchases equipment on credit for $8,000.How would Teasdale record this transaction?

Question

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Teasdale Printing Services purchased equipment on credit, which means they did not pay cash at the time of purchase. Therefore, there should be no credit to cash. The equipment is an asset, so it should be debited for its value of $8,000. However, since the purchase was made on credit, there is a liability that needs to be recorded. The liability is the accounts payable owed to the supplier of the equipment, which should be credited for $8,000. Therefore, the correct entry is to debit Equipment for $8,000 and credit Accounts Payable for $8,000.

Teasdale Printing Services Purchases Equipment on Credit for $8,000