Green's Book Store purchased a new automobile that cost $25,000, made a downpayment of $4,000, and signed a note payable for the balance. The entry to record this transaction is:

Question

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The entry to record this transaction would be a debit to Automobile for $25,000, a credit to Cash for $4,000, and a credit to Notes Payable for $21,000, the remaining balance. Option B correctly represents this transaction.

Green's Book Store Purchased a New Automobile That Cost $25,000