Question

On March 3, Mauer Moving buys $7,500 of supplies from General Products. Mauer does not provide any payment at the time of purchase but agrees to reimburse General in full within 30 days. When posting the journal entries related to this transaction, Mauer credits Supplies for $7,500 and debits Accounts Payable for $7,500. Which of the following statements best describes the results of this posting?A : In Mauer’s general ledger, the ending balance for the Supplies account will be too high, while the ending balance for the Accounts Payable account will be too low.
B : In Mauer’s general ledger, the ending balances for both the Supplies account and the Accounts Payable account will be too low.
C : In Mauer’s general ledger, the ending balance for the Supplies account will be too low, while the ending balance for the Accounts Payable account will be too high.
D : In Mauer’s general ledger, the ending balances for both the Supplies account and the Accounts Payable account will be too high

Answer 1

Answer:

B : In Mauer’s general ledger, the ending balances for both the Supplies account and the Accounts Payable account will be too low.

Explanation:

Supplies is an asset account, increase from debit and decrease from credit.  In this cae the purchase of supplies increase the balanc but, a mistake is made and is credited thus, decreases.

Account payableis an liability account, increase from credot and decrease from debit .  In this cae the purchase on account  increase the balance but, a mistake is made and is debited thus, decreases.

This makes b statement correct, both are lower than it should