Stear Corp. bought a commercial vehicle for $30,000 in the month of June 2015. It pays 50% of its purchase price by check immediately. It signs an agreement with the dealer to pay the balance in

Question

the month of December 2015. How will you classify the transaction for purchase when it is recorded in the journal?

A. 

simple journal entry

B. 

compound journal entry 

C. 

complicated journal entry

D. 

systematic journal entry

Answer 1

June 2015

DR Motor Vehicle $30000

CR Cash $15000

CR Loan payable $15000

To record the purchase of a motor vehicle for cash and on credit.

Correct Answer is B. [Compound journal entry because more than two accounts are affected.]

Learn more: http://www.yourarticlelibrary.com/accounting/journal/top-7-types-of-journal-entries-explained/63206