A business purchases equipment by paying $6,276 in cash and issuing a note payable of $19,177. Which of the following occurs? Select one: A. Cash is credited for $6,276, Equipment is credited for $25,453, and Notes Payable is debited for $19,177. B. Cash is debited for $6,276, Equipment is credited for $19,177, and Notes Payable is debited for $12,901. C. Cash is credited for $6,276, Equipment is debited for $25,453, and Notes Payable is credited for $19,177. D. Cash is debited for $6,276, Equipment is debited for $19,177, and Notes Payable is credited for $25,453.

The correct answer is C

Explanation:

The journal entry which is to be posted or recorded for the purchase of equipment is as:

Equipment A/c ... Dr25,453

Cash A/c ... Cr $6,276

Notes Payable A/c ... Cr $19,177

Being record the purchase of equipment and paid $6,276 amount in cash as well as issue the notes payable for the balance amount

As the business bought the equipment which means assets is increasing and any increase in cash is debited. Therefore, the equipment account is debited. And it is bought against cash, so cash is decreasing, so any decrease in cash is credited. Therefore, the cash account is credited. And against the amount of $19,177, issued the notes payable, so liability is increasing and any increase in liability will be credited. Therefore, the notes payable is credited.