A business purchases equipment by paying $6,276 in cash and issuing a note payable of $19,177. Which of the following occurs?

Question

Quizplus · Accepted Answer

When a business purchases equipment by paying cash and issuing a note payable, the following journal entry is made:

Equipment          $25,453
Cash                $6,276 
Notes Payable    $19,177

Cash is credited for the amount paid in cash, Equipment is debited for the cost of the equipment, and Notes Payable is credited for the amount of the note issued to finance the equipment purchase. Therefore, Option B is the correct answer.

A Business Purchases Equipment by Paying $6,276 in Cash and Issuing