Multiple Choice
The expenditure incurred for changing the oil in the company's fleet of trucks is debited to which account?
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2. Transaction Analysis
Journal Entries: Debits and Credits
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Which of the following journal entries correctly records Jayne Company's purchase of office supplies on account for \$1,200 during the month of June?
A
Debit Office Supplies \$1,200; Credit Accounts Payable \$1,200
B
Debit Office Supplies \$1,200; Credit Cash \$1,200
C
Debit Accounts Payable \$1,200; Credit Office Supplies \$1,200
D
Debit Cash \$1,200; Credit Office Supplies \$1,200
Verified step by step guidance1
Step 1: Understand the transaction. Jayne Company is purchasing office supplies on account, meaning they are not paying cash immediately but instead creating a liability (Accounts Payable).
Step 2: Identify the accounts involved. The accounts affected are 'Office Supplies' (an asset account) and 'Accounts Payable' (a liability account).
Step 3: Determine the nature of the accounts. 'Office Supplies' will increase because the company is acquiring supplies, and 'Accounts Payable' will increase because the company owes money for the purchase.
Step 4: Apply the rules of debits and credits. Assets increase with a debit, so 'Office Supplies' will be debited. Liabilities increase with a credit, so 'Accounts Payable' will be credited.
Step 5: Write the journal entry. The correct journal entry is: Debit Office Supplies \$1,200; Credit Accounts Payable \$1,200. This reflects the increase in assets and liabilities due to the purchase on account.
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