A business purchase equipment by paying cash of $8,000 and issuing a note payabl

Question

A business purchase equipment by paying cash of $8,000 and issuing a note payable of $12,000. Which of the following occurs? Cash is credited for $8,000; Equipment is credited for $20,000; and Notes payable is debited for $12,000. Cash is debited for $8,000; Equipment is debited for $12,000; and Notes payable is credited for $20,000. Cash is credited for $8,000; Equipment is debited for $20,000; and Notes payable is credited for $12,000. Cash is credited for $8,000; Equipment is credited for $12,000; and Notes payable is debited for $4,000.

Explanation / Answer

total equipment cost = 12000+8000 = 20000 as they are receiving the equipment, it is credited.. so OPTION A..

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