How can you Journalize the assets when it is purchased on credit?

When assets are purchased on credit, the journal entry will vary depending on the type of asset being acquired. Generally, the journal entry to record the purchase of an asset on credit includes debiting the appropriate asset account and crediting the accounts payable account. Here are some examples of journal entries for the purchase of different types of assets on credit:




  1. Purchase of Equipment on Credit:

Assume a business purchases equipment for $5,000 on credit from a supplier.

Journal Entry:

Debit: Equipment (Asset Account) – $5,000 Credit: Accounts Payable (Liability Account) – $5,000

  1. Purchase of Furniture on Credit:

Assume a business purchases furniture for $2,500 on credit from a supplier.

Journal Entry:

Debit: Furniture (Asset Account) – $2,500 Credit: Accounts Payable (Liability Account) – $2,500

  1. Purchase of Inventory (Merchandise) on Credit:

Assume a business purchases inventory (merchandise) for $1,000 on credit from a supplier.

Journal Entry:

Debit: Inventory (Asset Account) – $1,000 Credit: Accounts Payable (Liability Account) – $1,000

In each case, the asset being acquired (e.g., equipment, furniture, or inventory) is debited to increase its value on the balance sheet, as it represents a resource owned by the business. Simultaneously, the accounts payable account is credited to record the liability to the supplier for the amount owed on credit.




It’s important to ensure that the correct asset account is used and that the transactions are recorded accurately and in accordance with the accounting policies and practices of the business. Consulting with a qualified accountant or following the guidance of the accounting system used by the business will help ensure proper recording of asset purchases on credit.

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