Which of the following journal entries correctly records the receipt of a utility bill, which will be paid for in later weeks?
A)Utilities payable xxx
Utilities expense
Xxx
B)Utilities expense xxx
Utilities payable
Xxx
C)Utilities expense xxx
Retained earnings
Xxx
D)Retained earnings

Question

Which of the following journal entries correctly records the receipt of a utility bill, which will be paid for in later weeks?
A)Utilities payable xxx
Utilities expense
Xxx
B)Utilities expense xxx
Utilities payable
Xxx
C)Utilities expense xxx
Retained earnings
Xxx
D)Retained earnings

Quizplus · Accepted Answer

The correct entry would be to record the expense and the liability separately. Option B correctly records the expense as "Utilities expense" and the liability as "Utilities payable." Option A is incorrect because it debits "Utilities payable," which should be credited when paid in the future. Option C is incorrect because it credits "Retained earnings," which is not affected by the receipt of a utility bill. Option D is also incorrect because it does not record the receipt of the utility bill or account for the liability that will be incurred.

Which of the Following Journal Entries Correctly Records the Receipt