133k views
5 votes
Which of the following is included in the journal entry to record the use of utilities in a factory?

1) Debit Utilities Expense, Credit Cash
2) Debit Utilities Expense, Credit Accounts Payable
3) Debit Cash, Credit Utilities Expense
4) Debit Accounts Payable, Credit Utilities Expense

User Junko
by
7.2k points

1 Answer

3 votes

Final answer:

The correct journal entry to record the use of utilities in a factory is to debit Utilities Expense and credit Accounts Payable, reflecting the incurred cost that is to be paid in the future.

Step-by-step explanation:

The question asks which journal entry correctly records the use of utilities in a factory. When a company uses utilities, the cost is not necessarily paid immediately in cash; instead, the expense is often recognized first and paid later.

Therefore, the correct journal entry to record the utility expense would be a debit to Utilities Expense, which represents the cost of utilities used, and a credit to Accounts Payable, which represents the company's obligation to pay this cost in the future. This is reflected in option 2: Debit Utilities Expense, Credit Accounts Payable. When the payment is made later, the entry would then be a debit to Accounts Payable and a credit to Cash.

User Yoav Schniederman
by
8.5k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories