Which of the following is a correct journal entry for the purchase of inventory on credit?Question 2Answera.Debit Accounts Payable, Credit Inventoryb.Debit Cash, Credit Inventoryc.Debit Inventory, Credit Accounts Payabled.Debit Inventory, Credit Cash
Question
Which of the following is a correct journal entry for the purchase of inventory on credit?Question 2Answera.Debit Accounts Payable, Credit Inventoryb.Debit Cash, Credit Inventoryc.Debit Inventory, Credit Accounts Payabled.Debit Inventory, Credit Cash
Solution
The correct journal entry for the purchase of inventory on credit is:
c. Debit Inventory, Credit Accounts Payable
Here's why:
When you purchase inventory on credit, you increase (debit) your Inventory account because you have more items in stock. At the same time, you increase (credit) your Accounts Payable account because you owe money to your supplier.
So, the journal entry to record this transaction is:
Debit: Inventory (Increase in Asset) Credit: Accounts Payable (Increase in Liability)
Option a is incorrect because you should debit Inventory, not Accounts Payable. Option b is incorrect because you're not paying with cash, you're buying on credit. Option d is incorrect for the same reason as b, you're not using cash in this transaction.
Similar Questions
In the periodic inventory system, what is the journal entry to record the payment of accounts payable for inventory purchases?Question 30Answera.Debit Accounts Payable, Credit Cashb.Debit Cash, Credit Accounts Payablec.Debit Inventory, Credit Cashd.Debit Cash, Credit Inventory
The journal entry to record the purchase of materials on account is to:Multiple choice question.debit Accounts Payable and credit Raw Materials Inventorydebit Accounts Payable and credit Production Materialsdebit Production Materials and credit Accounts Payabledebit Raw Materials Inventory and credit Accounts Payable
Under a periodic inventory system, the beginning merchandise inventory is removed from the books with a journal entry that includes which of the following?Multiple Choicea debit to purchasesa debit to accounts payablea debit to merchandise inventorya debit to income summary
Credit memo or credit note is entered in which of the following journal? A. General journal B. Cash journal C. Purchase journal D. Sales return day book
If a customer purchases $5,000 of inventory and pays with the company's own retail card, what will the journal entry include?Select answer from the options belowcredit to accounts payable of $5,000debit to accounts receivable of $5,000debit to sales of $5,000debit to cash of $5,000
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.