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?

Question

Quizplus · Accepted Answer

The transaction involves the purchase of office supplies on credit, which means the company has not yet paid for the supplies. As per the company's policy of recording prepaid and unearned items in balance sheet accounts, the transaction should be recorded as a credit to Accounts Payable (a liability account) and a debit to Office Supplies (an asset account). Hence, option C is the correct choice. The other options are not appropriate because they do not comply with the company's policy or accounting standards.

Paul's Landscaping Purchased $500 of Office Supplies on Credit