Recording Purchase of Equipment Journal Entry

Explanation

To record the purchase of equipment with a cash down payment and a balance due in 30 days, a journal entry needs to be made to capture the transaction accurately.

The journal entry will involve debiting the Equipment account to recognize the increase in assets and crediting the Cash account for the cash paid, along with a credit to Accounts Payable for the amount due in 30 days.

The complete journal entry to record the purchase of the equipment would be:

Dr Equipment 840

Cr Cash 200

Cr Accounts Payable 640

Since the balance of $640 is due in 30 days, it will be recorded as Accounts Payable, representing the amount owed to the supplier for the equipment.

The total cost of the equipment is calculated by adding the cash down payment of $220 to the balance due of $640, making it $860 in total.