Darnell Company Purchased $88,000 of Computer Equipment from Joseph Company

question 72

Essay

Darnell Company purchased $88,000 of computer equipment from Joseph Company. Darnell Company paid for the equipment using cash that had been obtained from the sale of capital stock to Donnie Darnell.
Which entity or entities (Darnell Company, Joseph Company, Donnie Darnell) should record the transaction involving the computer equipment on their accounting records?

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Definitions:

Accounting Information System

A system designed to collect, store, manage, process, retrieve, and report financial data for decision making.

Flexibility Principle

In accounting, it refers to the principle that financial reporting and its practices should be flexible enough to adapt to changes in the business environment or in accounting standards.