A company purchases a delivery van by paying $11,500 cash and by signing a $31,500 note payable. Which of the following correctly describes the recording of the delivery van purchase?

a. Cash is debited for $8,500.
b. The delivery van account is debited for $28,500.
c. Notes payable is debited for $28,500.
d. The delivery van account is debited for $37,000.

The amounts sighted in the question are incorrect, so none of the options fits in.

Explanation: This is how to solve an illustration like this: since the company paid cash of $11,500 and signed $31,500 note payable in order to purchase the delivery van, the following accounting entries would be recorded:

                                                      Debit                         Credit

Delivery van                              $43,000

Cash                                                                                $11,500

Note payable                                                                 $31,500

Note that the acquisition cost of the van comprises cash payment and the note payable. When it is time to pay the outstanding balance of $31,500, the following entries would be recorded: Debit Note payable $31,500; Credit Cash $31,500.

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