Exercise 2-5 Analyzing effects of a compound entry LO A1 Groro Co. bills a client $62,000 for services provided and agrees to accept the following three items in full payment: (1) $10,000 cash, (2) equipment worth $80,000, and (3) to assume responsibility for a $28,000 note payable related to the equipment.
A) Analyze the transaction using the accounting equation.
Assets = Liabilities + Equity
Cash Equipment Note Payable Revenue
10,000 80,000 28,000 62,000
B) Record the transaction in journal entry form.
No Date General Journal Debit Credit
1 May 15 Cash 10,000
Equipment 80,000
Note payable 28,000
C) Post the entry using T-accounts to represent ledger accounts.
Cash 101 Note Payable
28000 10,000
Equipment 167 Revenue 404
80,000 62,000