Bostel wanted to expand the size of its warehouse in order to generate more profits.The company decided to purchase the building adjacent to its existing warehouse.The company pays for the building by borrowing from the bank.The purchase would be recorded as:

Question

Quizplus · Accepted Answer

The purchase of the building would increase the company's assets, specifically the buildings, which would be recorded as a debit to the Buildings account. However, since the company borrowed money from the bank to purchase the building, they have a liability, which would be recorded as a credit to the Notes Payable account. Therefore, the correct entry is Debit Buildings; Credit Notes Payable.

Bostel Wanted to Expand the Size of Its Warehouse in Order