Bostel wanted to expand the size of its warehouse in order to generate more profits. The company decided to purchase the building adjacent to its existing warehouse. The company pays for the building by borrowing from the bank. The purchase would be recorded as:

Debit Buildings as (credit Notes Payable).

Explanation:

Notes Payable is a bank account with a credit balance ordinarily. The auditor will deposit the Cash account when borrowing money from the bank to represent the increase in the amount of cash and credit the Notes Payable account to demonstrate the corresponding liabilities.

The indication of a note payable is a loan a bank has given to a company. A note payable is also referred to as a loan or a signed agreement.