Grayton Industries purchased supplies for $1,200. 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 $1,200, 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 another liability account for $500.
b. Credit the Grayton, Capital account for $500.
c. Debit the Grayton, Capital account for $500.
d. Credit an asset account for $700.
Journal entry:
Supplies [asset] [debit] $1200
To supplier [liability] [credit] $700
To cash [asset] [credit] $500
Actually the correct answer is to be credit cash which is an asset account for $ 500
However no such option is provided
[Assuming cash was paid by grayton on his personnel capacity then it can be considered as an capital addition and thereby credit the grayton capital account by $ 500- option b]
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