Suppose a company received a $2,500 utility bill for the month of March but has not yet recorded the transaction or paid the bill. What adjusting entry is necessary at March 31?
D) No Entry

Question

Quizplus · Accepted Answer

The adjusting entry necessary at March 31 is to recognize the expense that was incurred in March but not yet paid. This requires a debit to Utilities Expense for $2,500 and a credit to Utilities Payable for $2,500. Therefore, choice A is the correct answer. Choice B is not correct because it would decrease cash and not reflect the fact that the bill has not yet been paid. Choice C is also not correct because it would increase the payable and decrease the expense, which would not accurately reflect the company's financial position. Choice D is not correct because an adjusting entry is necessary to record the expense and liability.

Suppose a Company Received a $2,500 Utility Bill for the Month