Scottsdale Corp. received several invoices in the mail for oil changes performed on its company trucks during the last week of April. The total of the invoices was $900 and all are due on May 13. What entry should Scottsdale make at April 30 as a result of receiving the invoices?

Question

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The invoices received for oil changes are a liability because they represent an obligation to pay in the future. Therefore, the entry should be a credit to Accounts Payable. The expense for the oil changes should be recognized in the period in which they occurred, which is April. Therefore, the entry should also include a debit to Maintenance and Repairs Expense. Option A is incorrect because it would record the receipt of cash, which did not occur. Option C is incorrect because it would record an expense being paid immediately, which did not occur. Option D is incorrect because it would record prepayment for a future expense, which did not occur.