Schooner Inc.purchased equipment by signing a note payable.This transaction would be recorded as:

Question

Quizplus · Accepted Answer

When equipment is purchased through a note payable, it means the company is taking a loan to buy the asset. To record this transaction, we need to debit the equipment account to show an increase in assets and credit the notes payable account to show an increase in liabilities. Hence, the correct option is to debit Equipment and credit Notes Payable.