A company purchases a delivery van by paying $11,500 cash and by signing a $31,500 note payable. Which of the following correctly describes the recording of the delivery van purchase?

a. Cash is debited for $8,500.

b. The delivery van account is debited for $28,500.

c. Notes payable is debited for $28,500.

d. The delivery van account is debited for $37,000.

Question

Business

Francis

11 August, 02:37

A company purchases a delivery van by paying $11,500 cash and by signing a $31,500 note payable. Which of the following correctly describes the recording of the delivery van purchase?

a. Cash is debited for $8,500.

b. The delivery van account is debited for $28,500.

c. Notes payable is debited for $28,500.

d. The delivery van account is debited for $37,000.

+5

Answers (1)

Know the Answer?

Marlene Noble · Answer 1

Answer: The amounts sighted in the question are incorrect, so none of the options fits in.

Explanation: This is how to solve an illustration like this: since the company paid cash of $11,500 and signed $31,500 note payable in order to purchase the delivery van, the following accounting entries would be recorded:

Debit Credit

Delivery van $43,000

Cash $11,500

Note payable $31,500

Note that the acquisition cost of the van comprises cash payment and the note payable. When it is time to pay the outstanding balance of $31,500, the following entries would be recorded: Debit Note payable $31,500; Credit Cash $31,500.