What is the entry to record purchasing a truck for $50,000 with $7,000 cash and $43,000 accounts payable?

What is the entry to record purchasing a truck for $50,000 with $7,000 cash and $43,000 accounts payable?

• A. Debit Truck $50,000; Debit Cash $7,000; Credit Accounts Payable $43,000
• B. Debit Cash $7,000; Credit Truck $50,000; Credit Accounts Payable $43,000
• C. Debit Truck $43,000; Credit Cash $7,000; Credit Accounts Payable $50,000
• D. Debit Truck $50,000; Credit Cash $7,000; Credit Accounts Payable $43,000

Answer: (D)

When you acquire a long‑term asset with mixed payment, you record the asset at the total cost and reflect how you paid for it: cash paid reduces cash, and the amount financed creates a liability. The truck account should be debited for the full cost, since assets increase with a debit. Cash, being a cash outflow, is credited for the amount paid. The remaining amount owed is recorded as a credit to accounts payable, since a liability has been created. So the correct entry is: Debit Truck 50,000; Credit Cash 7,000; Credit Accounts Payable 43,000. This balances the books (50,000 on both sides) and shows the truck as an asset financed partly by cash and partly by a payable. Other approaches misstate the effects: debiting cash when cash is being paid is incorrect, and putting the truck’s debit for only part of 50,000 or misplacing the liability amount would not reflect the true cost or the financing structure of the purchase.

When you acquire a long‑term asset with mixed payment, you record the asset at the total cost and reflect how you paid for it: cash paid reduces cash, and the amount financed creates a liability. The truck account should be debited for the full cost, since assets increase with a debit. Cash, being a cash outflow, is credited for the amount paid. The remaining amount owed is recorded as a credit to accounts payable, since a liability has been created.

So the correct entry is: Debit Truck 50,000; Credit Cash 7,000; Credit Accounts Payable 43,000. This balances the books (50,000 on both sides) and shows the truck as an asset financed partly by cash and partly by a payable.

Other approaches misstate the effects: debiting cash when cash is being paid is incorrect, and putting the truck’s debit for only part of 50,000 or misplacing the liability amount would not reflect the true cost or the financing structure of the purchase.