Cameron Diaz Corporation purchased a computer system for $20,000.The company paid $5,000 cash and issued a $15,000 note payable for the entire balance.The journal entry to record this transaction includes a(n)________.
A)debit to Equipment for $20,000
B)credit to Accounts Payable for $15,000
C)debit to Expense for $20,000
D)credit to Cash for $20,000

Question

Quizplus · Accepted Answer

The journal entry to record the purchase of a computer system for $20,000 with $5,000 cash and a $15,000 note payable would be a debit to Equipment for $20,000 (the full cost of the equipment). There is no credit to Accounts Payable (since it was not used to purchase the equipment), no debit to Expense (since equipment is classified as an asset, not an expense), and no credit to Cash for $20,000 (since only $5,000 was paid in cash).

Cameron Diaz Corporation Purchased a Computer System for $20,000