A business purchases equipment by paying $6,081 in cash and issuing a note payable of $12,291.Which of the following occurs?

Question

Quizplus · Accepted Answer

When a business purchases equipment, it can pay for it with a combination of cash and a note payable. In this case, the business paid $6,081 in cash and issued a note payable of $12,291.

To record this transaction, we need to debit Equipment for the total cost ($18,372) and credit Cash for the amount paid in cash ($6,081) and Notes Payable for the amount owed on the note ($12,291).

So the journal entry would be:

Debit Equipment    $18,372
Credit Cash           $6,081
Credit Notes Payable $12,291

Therefore, choice B is the correct answer.

A Business Purchases Equipment by Paying $6,081 in Cash and Issuing