Q40. Purchase of noncurrent assets
Entity A purchased a building at $860,000 with a long-term bank loan of $860,000.
Prepare a journal entry to record this transaction.
A40. Increases in noncurrent assets are recorded on the debit side.
| Debit | Credit | |
| Building | 860,000 | |
| Long-term borrowings | 860,000 |
[Note]
1. Increase in noncurrent assets (asset): debit
2. Increase in long-term borrowings (liability): credit
[Exercise]
Entity B purchased equipment at $74,000 and issued a promissory note with the face amount of $74,000.
| Debit | Credit | |
| Equipment | 74,000 | |
| Notes payable | 74,000 |
[Note]
1. Increase in equipment (asset): debit
2. Increase in notes payable (liability): credit