Paid $8,000 for a truck and paid $2,000 on account. How is this noted in a journal and in which account?
Debit: truck/equipment 8,000
Credit: accounts payable 2,000
Credit: cash 6,000
The truck is added to its on account, or more normally, to equipment. It will be depreciated throughout its useful life.
When 2,000 is on account, this is in essence a short term loan; the rest, if not on account (or exchange of goods) is in cash.
There is a 6,000 investing outflow for cash.
Thank You Kelsey this is what I thought. I appreciate your time and answer
Content will be erased after question is completed.
Enter the email address associated with your account, and we will email you a link to reset your password.
Forgot your password?