Consider the Following Journal Entry

question 22

Multiple Choice

Consider the following journal entry:

Which of the following explanations best describes this journal entry?

• A) The company buys $10,000 of equipment, pays cash of $4,000, and signs a note for $6,000.
• B) The company receives $4,000 in cash and $6,000 in notes payable in exchange for selling $10,000 of equipment.
• C) The company buys $10,000 of equipment, pays $4,000 cash, and promises to cancel a debt owed to the company in the amount of $6,000.
• D) The company sells $10,000 of equipment, receives $4,000 in cash, and pays off $6,000 it owes on the equipment.

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Definitions:

Luxurious Vacation

A high-end travel experience featuring premium accommodations, exclusive amenities, and exceptional service.

Ritz-Carlton

A luxury hotel brand known for its high level of service quality and customer care, operating globally under the Marriott International portfolio.

Disposable Income

The financial resources that remain for saving and spending in households, following the deduction of income taxes.

State and Federal Income Taxes

Taxes imposed on individuals and businesses by state and the federal government based on the income earned within the tax year.