Question

Jones Dairy purchased a new milking machine for $40,000 cash. To record the transaction on Jones' books, you would:------------

Answer 1

To record the transaction on Jones Dairy's books, you would debit the milking machine account and credit the cash account for $40,000.

Step-by-step explanation:

To record the purchase of the milking machine on Jones Dairy's books, you would make the following journal entry:

1. Debit: Milking Machine $40,000
2. Credit: Cash $40,000

This entry debits the milking machine account, which represents an increase in assets, and credits the cash account, representing a decrease in assets. This transaction is recorded as a cash purchase, as Jones Dairy paid $40,000 in cash for the milking machine.