What the journal entry to record a purchase of equipment?
The purchase of property, plant, or equipment results in a debit to the asset section of the balance sheet. The credit is based on what form of payment you use as the customer. If you use cash, then you would credit cash. If you use credit card or another type of deferred payment, then you would credit accounts payable or another liability account.
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What is the journal entry to record an asset purchase that includes both land and equipment?
The key thing to understand is that the total purchase price is allocated between land and equipment based on the appraisal value from the bank. As you can see in the visual below, the total was appraisal value from the bank was $800. So, for land, we would divide $300/$800, which equals 37.5%, and multiply […]