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During the month,a company enters into the following transactions:
- Borrows $3,200 of cash from the bank by signing a formal agreement to repay the loan in 2 years.
- Buys $4,000 of new equipment on account.
- Pays off $2,400 of accounts payable.
- Pays off $1,200 of notes payable
Required:
Part a.Show the effect of these transactions on the basic accounting equation.
Part b.Prepare the journal entries that would be used to record the transactions.
Rate of Pay
The amount of money a person is paid per unit of time, such as an hourly wage or annual salary.
Hourly Pay Rate
The compensation given for each hour of labor.
Average Rate
A value representing the middle point of a rate over a specified period, often calculated by summing rates and dividing by the number of rates.
Rate of Interest
The percentage of the loan amount charged for borrowing money, typically expressed as an annual rate.
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