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Prepare a journal entry for the purchase of a truck on April 4 for $73,040, paying $4,200 cash and the remainder on account. If an amount box does not require an entry, leave it blank. April 4

Prepare a journal entry for the purchase of a truck on April 4 for $73,040, paying $4,200 cash and the remainder on account. If an amount box does not require an entry, leave it blank. April 4

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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**Journal Entry Preparation** **Scenario:** On April 4th, a truck was purchased for a total cost of $73,040. Out of this, $4,200 was paid in cash immediately, and the remaining balance was put on account (i.e., accounts payable). **Instructions:** Prepare a journal entry for this transaction. If a particular amount box does not need an entry, leave it blank. **Transaction Date:** April 4th **Journal Entry:** | Date | Account Titles and Explanation | Debit ($) | Credit ($) | |----------|--------------------------------|-----------|------------| | April 4 | Truck | 73,040 | | | April 4 | Cash | | 4,200 | | April 4 | Accounts Payable | | 68,840 | **Explanation:** 1. **Debiting the Truck Account:** - The total cost of the truck ($73,040) is debited to the Truck account, reflecting the acquisition of a new asset. 2. **Crediting the Cash Account:** - The amount paid in cash ($4,200) is credited to the Cash account, indicating the outflow of cash. 3. **Crediting the Accounts Payable:** - The remaining balance ($68,840) is credited to Accounts Payable, indicating the amount owed to the vendor. Note: The amounts in the debit and credit columns should always balance out (i.e., total debits should equal total credits) to maintain the accounting equation.
Transcribed Image Text:**Journal Entry Preparation** **Scenario:** On April 4th, a truck was purchased for a total cost of $73,040. Out of this, $4,200 was paid in cash immediately, and the remaining balance was put on account (i.e., accounts payable). **Instructions:** Prepare a journal entry for this transaction. If a particular amount box does not need an entry, leave it blank. **Transaction Date:** April 4th **Journal Entry:** | Date | Account Titles and Explanation | Debit ($) | Credit ($) | |----------|--------------------------------|-----------|------------| | April 4 | Truck | 73,040 | | | April 4 | Cash | | 4,200 | | April 4 | Accounts Payable | | 68,840 | **Explanation:** 1. **Debiting the Truck Account:** - The total cost of the truck ($73,040) is debited to the Truck account, reflecting the acquisition of a new asset. 2. **Crediting the Cash Account:** - The amount paid in cash ($4,200) is credited to the Cash account, indicating the outflow of cash. 3. **Crediting the Accounts Payable:** - The remaining balance ($68,840) is credited to Accounts Payable, indicating the amount owed to the vendor. Note: The amounts in the debit and credit columns should always balance out (i.e., total debits should equal total credits) to maintain the accounting equation.
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