The purchase of office equipment at a cost of $2,600 with an immediate down payment of $1,200 and agreement to pay the balance within 60 days is recorded by:
A)A debit of $2,600 to Office Equipment, a debit of $1,200 to Accounts Receivable, and a credit of $1,400 to Accounts Payable.
B)A debit of $1,400 to Accounts Receivable, a debit of $1,200 to Cash, and a credit of $2,600 to Office Equipment.
C)A debit of $2,600 to Office Equipment, a credit of $1,200 to Cash, and a credit of $1,400 to Accounts Payable.
D)A debit of $2,600 to Office Equipment, a credit of $1,200 to Cash, and a credit of $1,400 to Accounts Receivable.

Question

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The purchase is recorded with a debit to Office Equipment for the full cost of $2,600 and a credit to Accounts Payable for the amount still owed of $1,400. The immediate down payment of $1,200 is recorded with a credit to Cash. There is no need to record a debit to Accounts Receivable as the company is not receiving payment from a customer.

The Purchase of Office Equipment at a Cost of $2,600