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by Anonymous on March 24th, 2009

Anonymous

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Under accrual accounting how would a company record the purchase of a truck for $500 on their balance sheet, the payable and the actual payment?

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Answers. 1 helpful answer below.

  • by CPA_4_u on July 6th, 2009

    CPA_4_u

    Since you mention a payable, I assume this is a financed vehicle. For a financed vehicle, the initial entry would be:

    Debit Fixed Assets - Vehicles $500
    Credit Accounts Payable $500

    Until the vehicle is paid off, each payment would be recorded as:

    Debit Accounts Payable $xx
    Credit Cash $xx

    If the vehicle is not financed, the transaction would simply be recorded as:

    Debit Fixed Assets - Vehicles $500
    Credit Cash $500

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