Which of the following transactions would require a journal entry that includes both a debit and a credit?

• A. Counting inventory at year-end
• B. Preparing a trial balance
• C. Calculating depreciation expense for internal analysis only
• D. Recording the purchase of equipment for cash

Answer: (D)

Verified step by step guidance

1. Understand the concept of a journal entry: A journal entry is a record of a financial transaction in the accounting system, and it always includes at least one debit and one credit to maintain the accounting equation (Assets = Liabilities + Equity).
2. Analyze the given options: Transactions like counting inventory, preparing a trial balance, or calculating depreciation for internal analysis do not involve actual financial transactions that affect accounts. These are procedural or analytical tasks and do not require journal entries.
3. Focus on the correct answer: Recording the purchase of equipment for cash involves a financial transaction where one account increases (equipment asset) and another decreases (cash asset). This requires a journal entry with both a debit and a credit.
4. Determine the accounts involved: The purchase of equipment increases the Equipment account (an asset), which is debited, and decreases the Cash account (another asset), which is credited.
5. Structure the journal entry: The journal entry would look like this: Debit the Equipment account for the purchase amount and Credit the Cash account for the same amount, ensuring the accounting equation remains balanced.