Gently Laser Clinic Laser Equipment Purchase Transaction Analysis
What is the correct journal entry for Gently Laser Clinic's purchase of laser equipment?
The clinic purchased laser equipment for $4,445 and paid $633 down, with the remainder to be paid later. What are the appropriate accounting entries for this transaction?
Answer:
The correct journal entry for Gently Laser Clinic's purchase of laser equipment would be as follows:
- Accounts Payable $3,812 - Credit
- Equipment $4,445 - Debit
- Cash $633 - Credit
When Gently Laser Clinic purchased the laser equipment for $4,445 and paid $633 as a down payment, the remaining amount to be paid later would be $4,445 - $633 = $3,812.
The correct journal entry reflects the increase in equipment assets with a debit of $4,445, the decrease in cash with a credit entry of $633, and the recognition of the liability to pay the remaining amount with a credit entry to Accounts Payable for $3,812.
It is essential to accurately record these transactions in the clinic's accounting records to maintain proper financial reporting and ensure that the equipment purchase is appropriately reflected on the balance sheet.