Question

Paul's Landscaping 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 Paul's Landscaping make to record this transaction?
(A) Debit Office supplies expense, $500; credit Cash, $500.
(B) Debit Cash, $500; credit Office supplies, $500
(C) Debit Office supplies, $500; credit Accounts payable, $500
(D) Debit Office supplies, $500; credit Cash, $500
(E) Debit Accounts payable, $500; credit Office supplies, $500

Answer 1

Answer:

(C) Debit Office supplies, $500; credit Accounts payable, $500

Explanation:

Businesses maintain the office supplies inventory of supplies and record the supplies purchased into this account and expense it afterward with the usage of inventory. In this question offices supplies purchased will be debited to office supplies account. As it is purchased on account so it will be credited to account payable account to make a liability against the transaction.