Question

What is the journal entry to record payment of $90,000 to inventory suppliers on accounts payable?

Answer 1

To record the payment of $90,000 to inventory suppliers, debit Cash for $90,000 and credit Accounts Payable for $90,000, signifying a decrease in both cash assets and liabilities.

Step-by-step explanation:

The journal entry to record the payment of $90,000 to inventory suppliers on accounts payable would involve two accounts: Accounts Payable and Cash (or Cash Equivalents, if payment is made through another form). Accounts Payable will be credited because the liability to the supplier is being reduced. Cash will be debited because this asset is decreasing as payment is made.

The journal entry would be:
Debit: Inventory/Cash $90,000
Credit: Accounts Payable $90,000

This entry reflects the decrease in both the company's cash and accounts payable.