The Proper Journal Entry To Purchase A Computer On Account To Be Utilized Within The Business Would Be: | MCQ Solved!

Here is the Solution of Multiple Choice Question “The Proper Journal Entry To Purchase A Computer Or A Laptop Costing $1,350 On Account / Credit To Be Utilized Within The Business Would Be”

The correct answer is (b), as Purchased of Computer On Account Or Credit to be used in the business and not for resale purposes, is categorized under Office Equipment on the balance sheet i.e., Purchased of a computer (a Fixed Asset) on account increased the computer into the business, so, according to the Rules Of Debit And Credit, we debit office equipment account of $1,350 as a Fixed Asset and credit Accounts Payable Account (a Current Liability) of $1,350 as liability to the business also increased. The company will pay for the computer bought on account and that time no cash is paid to the accounts payable or vendor or supplier.

The computer is used in the office is categorized under "Office Equipment", so we debit office equipment account instead of computer account which is a Fixed Asset or Non Current Asset.

If computer bought for resale purposes and not for use in the business, then we debit purchases account and credit accounts payable account / sundry creditor account as now we treat computer as goods rather than an asset.