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.
1. Increase in noncurrent assets (asset): debit
2. Increase in long-term borrowings (liability): credit
Entity B purchased equipment at $74,000 and issued a promissory note with the face amount of $74,000.
1. Increase in equipment (asset): debit
2. Increase in notes payable (liability): credit