When a company purchases a computer on credit for $2,500, which of the following journal entries is made?

When a company purchases a computer on credit for $2,500, the correct journal entry involves recognizing an increase in assets and an increase in liabilities. The company is acquiring a computer, which is an asset, and since it is purchasing it on credit, it is incurring a liability that it must pay back in the future.

By debiting the asset account, you are reflecting the increase in resources owned by the company. In this case, the computer represents a tangible asset that will be used in the operations of the business. Debiting this account effectively adds the asset to the company's balance sheet.

Simultaneously, by crediting the liabilities account, you are acknowledging that the company owes money for this purchase. This entry increases the liabilities section of the balance sheet, indicating an obligation that the company has to settle in the future.

This dual entry system maintains the accounting equation of assets equaling liabilities plus owner's equity, ensuring that all financial transactions are accurately represented in the company’s financial statements.

Thus, the correct journal entry is to debit assets (the computer) and credit liabilities (the amount owed), accurately reflecting the transaction's impact on the company's financial position.