Question

on march 15, complete computer service purchased a $25,000 building in exchange for a notes payable. the journal entry to record this transaction would be: options with journal entry tables omitted as per ocr text processing rules

Explanation:

To record the purchase of a building in exchange for a notes payable, we analyze the accounts:

• The building is an asset, so we debit the "Building" account (increasing assets) for $25,000.
• The notes payable is a liability, so we credit the "Notes Payable" account (increasing liabilities) for $25,000.

Now let's analyze each option:

1. First option: Debits Cash and credits Building. But the transaction doesn't involve cash, so this is incorrect.
2. Second option: Debits Building (correct, as it's an asset increase) and credits Notes Payable (correct, as it's a liability increase). This matches the transaction.
3. Third option: Debits Notes Payable and credits Building. This is the reverse of what's needed (Notes Payable should be credited, Building debited), so incorrect.
4. Fourth option: Debits Building and credits Cash. The transaction doesn't involve cash, so incorrect.

Answer:

The correct journal entry is the second option:

Date	Accounts	Debit	Credit
	Notes Payable		25,000