Furniture with a list price of $6,000 is purchased on account for $5,000. Which of the following entries properly records this transaction?

Question

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The transaction involves a purchase on account, which means that the buyer did not pay cash immediately but agreed to pay in the future. Therefore, the entry should account for both the furniture purchase and the liability to pay the remaining amount. Option C correctly records the purchase of furniture for $5,000 and creates a corresponding accounts payable liability of $5,000. Option A and D do not account for the remaining liability, while Option B records the furniture at its list price of $6,000, which does not reflect the actual purchase price.

Furniture with a List Price of $6,000 Is Purchased on Account