Which of the following journal entries correctly records the purchase of equipment for \$35,000 in cash?

• A. Debit Equipment \$35,000; Credit Revenue \$35,000
• B. Debit Expense \$35,000; Credit Cash \$35,000
• C. Debit Equipment \$35,000; Credit Cash \$35,000
• D. Debit Cash \$35,000; Credit Equipment \$35,000

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the nature of the transaction. The purchase of equipment is an asset acquisition, and it is paid for in cash. This means the Equipment account (an asset) will increase, and the Cash account (another asset) will decrease.
2. Step 2: Recall the rules of debits and credits. Assets increase with debits and decrease with credits. Since Equipment is increasing, it will be debited, and since Cash is decreasing, it will be credited.
3. Step 3: Analyze the journal entry options provided. The correct journal entry should reflect a debit to Equipment for \$35,000 and a credit to Cash for \$35,000, as this matches the transaction's impact on the accounts.
4. Step 4: Eliminate incorrect options. For example, 'Debit Equipment \$35,000; Credit Revenue \$35,000' is incorrect because Revenue is not involved in this transaction. Similarly, 'Debit Expense \$35,000; Credit Cash \$35,000' is incorrect because the purchase of equipment is not an expense but an asset acquisition.
5. Step 5: Confirm the correct journal entry. The correct journal entry is 'Debit Equipment \$35,000; Credit Cash \$35,000,' as it accurately reflects the increase in the Equipment account and the decrease in the Cash account.