Asked by
Nafisha Khanom
on Nov 14, 2024
Verified
Madrid Industries purchased supplies for $1200. They paid $500 in cash and agreed to pay the balance in 30 days. The journal entry to record this transaction would include a debit to an asset account for $1200 a credit to a liability account for $700. Which of the following would be the correct way to complete the recording of the transaction?
A) Credit an asset account for $500.
B) Credit another liability account for $500.
C) Credit the Capital account for $500.
D) Debit the Capital account for $500.
Liability Account
A financial accounting account that represents obligations to pay debts or amounts owed to others.
Capital Account
An account showing the net worth of a business entity, including its equity and investments.
Asset Account
An account that records the assets owned by a company, showing their value on the balance sheet.
- Acknowledge the implications of purchasing materials on a credit basis.
Verified Answer
CW
Learning Objectives
- Acknowledge the implications of purchasing materials on a credit basis.