Please help!!!!

Question

Dec 6. Purchased for $180,000 all the equipment formerly owned by Rent-it. Paid $80,000 cash and issued a one- year note payable for $100,000, plus interest at the annual rate of 9%.

 

How would I journalized this

in a general journal. Please explain step by step. I really want to understand how this goes. Thank you!! 

Answer 1

Since I do not have a chart of accounts, I can only make general references.

 

As an easy way to think of the entries, debits represent the destination of money, and credits represent the source of money.

 

 

Equipment was purchased whose value was $180,000

 

Step 1: make a debit entry to an Asset account

 

Step 2: make a credit entry to the checkbook (the source of cash)

 

Step 3: make an entry in loans payable under Liabilities, because money was borrowed in order to buy the equipment

 

Momentarily, the interest rate on the loan is unimportant.