A firm purchased equipment for $6,000 on credit and issued a 120-day note bearing interest at 9 percent a year as evidence of the debt. To record this transaction, the accountant would debit

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When equipment is purchased on credit, the Equipment account is debited for the cost of the equipment, and the Notes Payable account is credited for the same amount since the firm issued a note as evidence of the debt. Interest will not be recorded until the time period specified on the note has elapsed. Therefore, there is no need to debit or credit Interest Expense at the time of the purchase.

A Firm Purchased Equipment for $6,000 on Credit and Issued