Question

Green Cleaning purchased $500 of office supplies on credit. The company’s policy is to initially record prepaid and unearned items in balance sheet accounts. Which of the following general journal entries will Green Cleaning make to record this transaction?
Debit Office supplies, $500; credit Cash, $500.

Debit Office supplies, $500; credit Accounts payable, $500.

Debit Accounts payable, $500; credit Office supplies, $500.

Debit Office supplies expense, $500; credit Cash, $500.

Debit Cash, $500; credit Office supplies, $500

Answer 1

Answer:

Debit Office supplies, $500; credit Accounts payable, $500.

Explanation:

Purchase of supplies on credit will increase the supplies and increase the account payable balance as well. Supplies account is an asset account therefore it has debit balance and Account payable is a liability account so it has credit balance. To reflect the event following Journal entry is recorded.

Debit       Office supplies         $500

Credit      Accounts payable    $500