Accounting · Journal Entries
Rashid, a sole trader, has purchased a new machine for long-term use in his business. He has financed the purchase by taking out a bank loan. Rashid will start to make capital repayments on the loan in two years' time. Which of the following is the correct journal entry to record the purchase of this new machine?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1DR Non-current assets: machinery; CR Non-current liabilities: loan✓
- 2DR Non-current assets: machinery; CR Current liabilities: loan
- 3DR Non-current liabilities: loan; CR Non-current assets: machinery
- 4DR Current liabilities: loan; CR Non-current assets: machinery
Correct answer
DR Non-current assets: machinery; CR Non-current liabilities: loan
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