T. P. Varnum has been appointed trustee under a Chapter 11 reorganization of Lyon Corporation. The trustee has decided to open a new set of records for the period of trusteeship. The trustee pays the balance of an account payable that was recorded prior to the date of stewardship. When payment is recorded on the trustee's books, the account debited is

Question

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The trustee is only responsible for transactions that occur during the period of trusteeship, so the account payable should be recorded as Accounts Payable-Lyon Corporation to differentiate it from any other accounts payable that may exist on the trustee's books. This will also make it easier to reconcile with Lyon Corporation's records when the trustee's period is over. Retained Earnings and an appropriate expense account do not apply in this situation.

T P Varnum Has Been Appointed Trustee Under a Chapter 11