Final answer:
To record the equipment purchase, debit the equipment account by $15,000, credit cash for $5,000, and credit notes payable for the remaining $10,000 due in one year.
Step-by-step explanation:
The student's question involves a transaction where equipment was purchased, part of it was paid in cash, and the remaining balance was covered by signing a note payable. This transaction will lead to a journal entry that reflects the acquisition of an asset and the creation of a liability for the business. The correct journal entry in this instance would be to debit the equipment account to record the new asset, credit the cash account for the cash paid, and credit a notes payable account for the balance that will be due in the future.
The journal entry for this transaction would look like this:
- Equipment $15,000(debit)
- Cash $5,000(credit)
- Notes Payable $10,000(credit)
The debited equipment account increases to reflect the new piece of equipment now owned by the company. The cash account is credited to indicate that cash has been spent. And lastly, notes payable is credited to record a liability that reflects the debt to be paid in the future.