Fixed Asset Purchases With Note Payable

A business purchases land and buildings for 650, and pays 350 in cash and issues a 5% note payable for the balance of 300, which is secured by a mortgage on the property.

The journal entry to record the initial purchase of the property using a combination of cash and notes payable is as follows:

Fixed asset purchases with note journal entry
Account Debit Credit
Property 650
Cash 350
Notes payable 300
Total 650 650

Fixed Asset Purchases With Note Bookkeeping Entries Explained

The debit entry to property records the acquisition of the land and buildings.

Cash went out of the business to pay the supplier, and a liability (notes payable) is established for the balance outstanding.

The Accounting Equation

The accounting equation, Assets = Liabilities + Owners Equity means that the total assets of the business are always equal to the total liabilities plus the owners equity of the business. This is true at any time and applies to each transaction. For this transaction the accounting equation is shown in the following table.

Fixed Asset Purchases With Note – Accounting Equation
Assets = Liabilities + Owners Equity
Property + Cash = Notes payable +  None
650 – 350 = 300 + 0

In this case on the left hand side of the accounting equation, an asset (property) has been increased by the debit entry of 650, and another asset (cash) has been reduced by the credit entry of 350, this results in a net increase in assets of 300. On the right hand side of the accounting equation, a liability (notes payable) has been increased by an amount of 300.

Popular Examples

This fixed asset purchases with note journal entry is one of many examples used in, discover another at the links below.

Fixed Asset Purchases With Note Payable November 6th, 2016Team

You May Also Like

Related pages

perpetual accounting systemwhat are accrued revenuesimpress accountsales ledger control account formatunits of activity depreciation calculatorprepaid expenses in trial balancepurchased supplies on account journal entrylist of accounting entriespetty cash template downloadjournal entry for unrealized gain on trading securitiesmarkup multiplierreceivable turnover ratio calculatorpetty cash transactions definitionnpv calculator excelwarranty reserve accountingwarranty expense journal entryhow to fill out a ledger sheetledger debitnet credit sales formulafinancial leverage ratio definitionblank general ledgercapacity cushion definitionpercentage markup formulacalculate payback period uneven cash flowsfuture value of a lump sum calculatorgross margin ratio equationgp calculator excelcapital lease interest rateformula for total contribution marginhow to figure inventory turnoveraccounting perpetual inventory systemwhat is acid test ratio formulawhat is the present value of an annuityannuities due calculatorhow do you calculate cost of goods manufacturedfuture value of an annuity calculator monthlyfixed assets turnover formulatransaction sheet templatecalculate annuity in excelhow to calculate total overhead varianceadjusted trial balance worksheethow to compute ending inventorymeasurement of information about a business in the monetary unitindirect labor is a part ofnet receivables turnoverpayroll journal entry examplecalculate markup formuladepreciation reducing balance method exampleaccounting entries for saleswhat is a pmt functionlifo reserve adjustmentpresent value annuity excelnet profit sales ratiozero coupon bonds formulabank reconciliation statement formuladividends payable journal entrywhat is the accounts receivable turnoverhow to calculate margin in excelaccounting template for excelfactoring accounts receivable examplewhat is the periodicity assumptiondefine sundry creditorsdoubling period formulareorder point definitionsimple excel spreadsheet examplescapital lease calculator excelformula for debtor daysmirr exceladjusting entry for unearned rentformula of payback periodwhich of the following is an example of accrued revenue