Question

Consulting immediately paid $500 cash for utilities for the current month. Given the choices below, determine the general journal entry that A. Egert Consulting will make to record this transaction.
a. Utilities Expense 500
Cash 500

b. Cash 500
Utilities Expense 500

c. Cash 500
Accounts Payable 500

d. Utilities Expense 500
Accounts Payable 500

e. Prepaid Utilities 500
Accounts Payable 500

Answer 1

Answer:

a. Utilities Expense 500

    Cash 500

Explanation:

Given: Consulting immediately paid $500 cash for utilities.

As $500 cash been paid for utility expenses.

We know the golden rule of accounting transaction:

• Personal accounts: Debit the receiver, credit the giver.
• Impersonal real account: Debit what comes in, credit what goes out.
• Impersonal Nominal account: Debit all expenses and losses, credit all profit and gains.

Paid for utility expense of firm is not the personal account, however, it is impersonal account. In the given case, cash is going out of business.

Therefore, Debit all expense and losses and credit what goes out of business.

Journal Entry of the transaction:

Debit utility expenses account--- $500

     Credit cash account--- $500