Question

On June 1, Oxford Company purchased $8,000 of office equipment from Comma Company. Oxford Company paid $2,000 in cash, and it signed a 6-month, 10% note payable for the remaining balance. How would Oxford Company record this transaction on June 1? (which entry is correct?)

A. Cash 2,000

Equipment                                          8,000

Notes Payable                                     6,000

B. Equipment 8,000

Cash                                                    2,000

Notes Payable                                     6,000

C. Cash 2,000

     Equipment                         8,000

Notes Payable                                     10,000

D. Notes Payable 6,000

     Cash                                   2,000

Equipment                                          8,000

E. Notes Receivable 8,000

Equipment                                          6,000

Cash                                                    2,000

Group of answer choices

Answer 1

Cost of equipment = $8,000

Cash paid = $2,000

Note payable issued = Cost of equipment - Cash paid

= 8,000-2,000

= $6,000

Increase in assets is debited, thus equipment will be debited by $8,000.

Decrease in assets is credited, thus cash will be credited by $2,000.

Increase in liabilities is credited, thus note payable will be credited by $6,000.

Hence correct option is B.

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