The proper journal entry to purchase a computer costing $975 on account to be utilized within the business would be
A) Office Supplies Accounts Payable
975
975
B) Office Equipment Accounts Receivable
975
975
C) Office Equipment Accounts Payable
975
975
D) Office Supplies Accounts Receivable
975
975

Question

Quizplus · Accepted Answer

The purchase of a computer for business use would be classified as a fixed asset and therefore should be recorded under the Office Equipment account. Since the purchase is on account, the Accounts Payable account should also be credited. Therefore, the proper journal entry would be Office Equipment (debit) for $975 and Accounts Payable (credit) for $975. Choice A is incorrect because Office Supplies would not be the appropriate account to use for a computer purchase. Choice B is incorrect because the purchase was made on account, not with cash, so Accounts Receivable should not be used. Choice D is incorrect because once again, Office Supplies is not the correct account to use for this type of purchase.

The Proper Journal Entry to Purchase a Computer Costing $975