The Journal Entry for Purchasing Equipment and Furniture
- Debit to Cash: $1,010
- Credit to Equipment: $660
- Credit to Furniture: $350
Explanation
When a company makes a purchase, the journal entry needs to reflect the increase and decrease in relevant accounts. In this case, the company is buying equipment and furniture, which are assets. When assets are purchased, they increase, and the accounts associated with these assets should be credited.
In the transaction mentioned, the company is paying for the equipment and furniture with Cash, which is also an asset. When Cash is paid out, it decreases, so Cash needs to be debited in the journal entry. On the other hand, Equipment and Furniture are increasing due to the purchase, so they need to be credited.
By following the double-entry accounting system, we ensure that the journal entry is accurate and reflects the impact of the transaction on the company's financial position. Debiting Cash and crediting Equipment and Furniture in this transaction is the correct way to accurately record the purchase of equipment and furniture in the company's books.