Question

The journal entry to record the purchase of equipment for a $210 cash down payment and a balance of $620 due in 30 days would include

Multiple Choice:

1. a debit to Equipment for $210 and a credit to Cash for $210.

2. a debit to Equipment for $830, a credit to Cash for $210, and a credit to Accounts Payable for $620.

3. debit to Equipment for $830 and a credit to Cash for $830

4. a debit to Equipment for $210 and a credit to Accounts Payable for $620

Answer 1

1. Total Value of the equipment = Cash down payment + balance due

= $210+$620 = $830

Hence asset should be recorded for $830

2. Cash down payment is cash outflow, hence cash account to be credited for $210

3. Remaining amount payable to the vendor is $620. Hence credit of $620 to accounts Payable

The entry will be

Particulars	Debit	Credit
Equipment A/c Dr.	$ 830.00
Cash A/c Cr.		$ 210.00
Account Payable A/c Cr.		$ 620.00

Hence the answer is point 2. a debit to equipment for $830, a credit to cash for $210, and a credit to Accounts Payable for $620.