Q21. Purchase of equipment
Entity A purchased equipment and issued a promissory note to pay $26,000 three months later.
Prepare a journal entry to record this transaction.
A21. Increase in equipment is recorded on the debit side.
1. Increase in equipment (asset): debit
2. Increase in notes payable (liability): credit
Entity B purchased a building with a 10 year bank loan of $920,000.
1. Increase in building (asset): debit
2. Increase in long-term borrowings (liability): credit