Final answer:
The correct journal entry for purchasing $20,100 of equipment on credit is a debit to Equipment for $20,100 and a credit to Accounts Payable for $20,100, which reflects the company's increased assets and liabilities respectively. The correct option is 2.
Step-by-step explanation:
The correct journal entry to record the purchase of equipment on credit is a debit to Equipment and a credit to Accounts Payable. When a company acquires an asset like equipment and promises to pay for it later, it increases its Equipment account, which is an asset account, through a debit.
Concurrently, its Accounts Payable, which is a liability account, increases through a credit. This reflects the company's obligation to pay for the equipment in the future. The correct entry is:
Debit Equipment $20,100
Credit Accounts Payable $20,100
This corresponds to option 2 in the multiple choice question presented.
As the given question is incomplete, the complete question is:
company purchased $20,100 of equipment on credit. The journal entry to record this transaction consists of a:
Multiple Choice
1. Debit to Accounts Payable for $20,100; credit to Equipment for $20,100.
2. Debit to Equipment for $20,100; credit to Accounts Payable for $20,100.
3. Debit to Equipment for $20,100; credit to Cash for $20,100.
4. Debit to Cash for $20,100; credit to Equipment for $20,100.
5. Debit to Equipment for $20,100; credit to Equipment Expense for $20,100.