Question

On October 10, a company paid $12,000 to its suppliers, of which $2,000 was for supplies received on October 10 and $10,000 was for supplies received and recorded during September. The $12,000 payment would be recorded as_____________

Answer 1

The $12,000 payment is split between a reduction in accounts payable for previous supplies and a current period expense for recently received supplies.

Step-by-step explanation:

Accounting is the process of recording, classifying and summarizing financial transactions.

It provides a clear picture of the financial health of your organization and its performance, which can serve as a catalyst for resource management and strategic growth.

In this case, the $12,000 payment made by the company on October 10 would be recorded in the company's financial records accordingly.

Since $10,000 was for supplies received during September, it would be recorded as a reduction in accounts payable for those goods previously received and recorded.

The remaining $2,000, which is for the supplies received on the same day as payment, would be recorded both as an expense for the current period and as a cash outflow in the cash account.