Thunderstruck plc purchased £2,000 of inventory,paying £800 cash.How would you record this transaction using double entry bookkeeping?

Question

Quizplus · Accepted Answer

The transaction involves the purchase of inventory for £2,000, of which £800 was paid in cash. Therefore, the accounting entry should credit cash for £800, credit accounts payable for the remaining £1,200, and debit the inventory account for the full amount of £2,000. This reflects the increase in inventory assets and the liability owed to the supplier for the remaining balance. Option C is the only choice that reflects these transactions correctly. Option A is incorrect because it debits accounts payables instead of crediting it, resulting in an incorrect accounting entry. Option B is incorrect because it credits cash with the full amount, which does not reflect the partial payment made in cash. Option D is also incorrect because it does not account for the accounts payable balance owed to the supplier.

Thunderstruck Plc Purchased £2,000 of Inventory,paying £800 Cash