Master Equipment has a $17,400 liability to Arrow Paint Co. When Master Equipment makes a partial payment of $7,600 on this liability, which of following is true about the journal entry made by Master to record this transaction?

Question

Quizplus · Accepted Answer

When Master Equipment makes a partial payment of $7,600 on the liability of $17,400, the Accounts Payable account is credited and the Cash account is debited. This reduces the liability by the amount paid, and Master Equipment's cash balance is reduced by the same amount. Therefore, the correct journal entry for this transaction would be to debit the Accounts Payable account for $7,600 and credit the Cash account for $7,600. Hence, option D is the correct answer.

Master Equipment Has a $17,400 Liability to Arrow Paint Co