Q10. Purchase of merchandise
Entity A purchased 100 units of merchandise at $8,300 on account.
Prepare a journal entry to record this transaction.
A10. Purchasing on account is recorded by posting accounts payable on the credit side.
Journal entry:
| Debit | Credit | |
| Merchandise | 8,300 | |
| Accounts payable | 8,300 |
[Note]
1. Increase in merchandise (asset): debit
2. Increase in accounts payable (liability): credit
[Exercise]
Entity B purchased 150 units of merchandise at $32,000 and issued a promissory note for the full purchase price.
| Debit | Credit | |
| Merchandise | 32,000 | |
| Notes payable | 32,000 |
[Note]
1. Increase in merchandise (asset): debit
2. Increase in notes payable (liability): credit