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

Since the office supplies were purchased on credit, the journal entry should include a credit to Accounts payable. Additionally, since the company's policy is to initially record prepaid and unearned items in balance sheet accounts, the debit should be to an asset account. Therefore, the correct journal entry is to debit Office supplies for $500 and credit Accounts payable for $500.

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