A $20 000 machine is purchased by paying $5000 cash and agreeing to pay for the remainder in 30 days’ time, the journal entry should include a: Group of answer choices credit to Accounts Payable. debit to Cash. credit to Revenue. credit to Machinery.
Question
A 5000 cash and agreeing to pay for the remainder in 30 days’ time, the journal entry should include a:
Group of answer choices
credit to Accounts Payable.
debit to Cash.
credit to Revenue.
credit to Machinery.
Solution
The journal entry for this transaction should include a credit to Accounts Payable.
Here's why:
-
In this transaction, a machine is being purchased for 5,000 is being paid in cash upfront, and the remaining $15,000 is to be paid in 30 days.
-
The machine being purchased is an asset for the company. Therefore, the Machinery account (an asset account) should be debited for the full purchase price of $20,000.
-
The Cash account (another asset account) should be credited for the amount of cash paid, which is $5,000. This is because the cash is leaving the company, and a decrease in an asset account is recorded as a credit.
-
The remaining 15,000. This is because an increase in a liability account is recorded as a credit.
-
The Revenue account is not involved in this transaction, as no revenue is being earned.
So, the journal entry for this transaction would look something like this:
Debit Machinery 5,000 Credit Accounts Payable $15,000
Similar Questions
A supplier offers a company terms 3/10, n/30 for a $10,000 purchase on account on January 1. The company uses a perpetual inventory system to record transactions. If the company makes the payment on January 10, the entry to record the payment will include a:Multiple ChoiceDebit to Accounts Payable for $300Credit to Inventory for $300Debit to Accounts Payable for $9,700Credit to Cash for $10,000
Select all that applyThermal, Inc. bought a new office computer for $5,000 cash. The journal entry to record this transaction will include a $5,000 ______. (Check all that apply.)Multiple select question.debit to Equipment Expensecredit to Equipmentcredit to Cashdebit to Equipmentdebit to Cash
One of the business's suppliers provides inventory to them on credit and they purchased $2000 worth and will pay it in 6 weeks. Select the flows and accounts that the business would use to record this transaction.
A company purchased $3,200 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $900 worth of merchandise. On July 12, it paid the full amount due. Assuming the company uses a perpetual inventory system, and records purchases using the gross method, the correct journal entry to record the payment on July 12 is:Multiple ChoiceDebit Merchandise Inventory $2,300; credit Cash $2,300.Debit Cash $2,300; credit Accounts Payable $2,300.Debit Accounts Payable $2,300; credit Merchandise Inventory $46; credit Cash $2,254.Debit Accounts Payable $3,200; credit Cash $3,200.Debit Accounts Payable $2,300; credit Cash $2,300.
X-Mart uses the perpetual inventory system to account for its merchandise. On May 1, it sold $1,400 of merchandise on credit with terms of 1/10,n/40. Demonstrate the required journal entry to record the receipt of payment on May 25 by selecting all of the correct actions below.Multiple select question.Credit Accounts Receivable $1,400.Debit Accounts Receivable $1,400.Debit Sales Discounts $14.Debit Cash $1,400.Credit Cash $1,400.Credit Sales Discounts $14.
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.