Question

Consider the following journal entry:

Equipment 10,000

Cash 4,000

Note Payable 6,000

Which of the following explanations best describes this journal entry?

A.The company buys $10,000 of equipment, pays cash of $4,000, and signs a note for $6,000.

B. The company receives $4,000 in cash and $6,000 in notes payable in exchange for selling $10,000 of equipment.

C.The company buys $10,000 of equipment, pays $4,000 cash, and promises to cancel a debt owed to the company in the amount of $6,000.

D.The company sells $10,000 of equipment, receives $4,000 in cash, and pays off $6,000 it owes on the equipment.