A Company Entered into the Following Transaction: Purchased Equipment for Use

question 34

Multiple Choice

A company entered into the following transaction: Purchased equipment for use in the business at a cost of $12,000, one-fourth was paid in cash and the company signed a note for the balance. Choose the TRUE
Statement about the journal entry to record this transaction.

• A) The journal entry will include a debit to Notes receivable of $3,000.
• B) The journal entry will include a debit to Cash of $12,000.
• C) The journal entry will include a credit to Notes payable of $9,000.
• D) The journal entry will include a credit to Equipment $12,000.

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Definitions:

Normal Balance

The usual balance of an accounting account, either a debit for assets and expenses or a credit for liabilities, equity, and income.

Account Category

A classification for financial transactions that helps in organizing and reporting them in the financial statements, such as assets, liabilities, equity, revenues, and expenses.

Accounts Receivable Subsidiary Ledger

A detailed record that tracks individual balances owed by customers, supporting the total accounts receivable balance listed on the general ledger.

Accounts Payable Subsidiary Ledger

A detailed ledger breaking down accounts payable into individual supplier accounts, assisting in tracking what is owed to each creditor.