Question

A company purchases a building 150,000 signing a note payable. Record the transaction.

Answer 1

See explanation

Step-by-step explanation:

When a company purchases a building by signing a note payable and not through the cash, the journal entry to record the purchase of building is as follows:

Debit Building $150,000

Credit Note payable $150,000

In that case, the company does not pay any cash to purchase the land. It signs a note to buy the tangible asset. For purchasing the building, it increases the asset. And as it purchases by signing a note, it increases the liability.