Canine Grooming purchased $600 of equipment on credit for its grooming salon using a long-term note payable.How would Canine Grooming record this transaction?

Question

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Since the equipment was purchased on credit using a long-term note payable, there was no immediate cash payment made. Therefore, cash does not decrease. Equipment increases by $600 because the company acquired new equipment worth that amount. Notes Payable increases by $600 because the company now owes $600 to the creditor for the purchase of the equipment.

Canine Grooming Purchased $600 of Equipment on Credit for Its