Perry Trucking has its local automotive service company change the oil on its trucks.They bill is $1,200,which Perry pays in cash.How would the company record this transaction?
A)Debit Trucks for $1,200 and credit Cash for $1,200.
B)Debit Repairs Expense for $1,200 and credit Cash for $1,200.
C)Debit Trucks for $1,200 and credit Accounts Payable for $1,200.
D)Debit Repairs Expense for $1,200 and credit Accounts Payable for $1,200.
E)Debit Depreciation Expense for $1,200 and credit Cash for $1,200.

Question

Quizplus · Accepted Answer

The transaction is an expense for Perry Trucking and should be recorded as such. Therefore, the correct entry is to debit Repairs Expense for $1,200 and credit Cash for $1,200. Option A is incorrect because it would increase the value of the Trucks asset account and not properly record the expense. Option C is incorrect because it would be appropriate if the bill was not paid immediately, but Perry paid the bill with cash. Option D is incorrect because it would be appropriate if the bill was not paid immediately, but Perry paid the bill with cash. Option E is incorrect because depreciation expense is not related to this transaction.

Perry Trucking Has Its Local Automotive Service Company Change the Oil