Final answer:
The correct journal entry for ABC paying $5,000 for a logo to Libby Design would be a debit to the Logo account and a credit to Cash, as the logo is classified as an asset.
Step-by-step explanation:
When ABC pays Libby Design $5,000 cash for the creation of a logo, the correct accounting treatment for this transaction would be to record the logo as an asset (not an expense) because it is an intangible asset that provides future economic benefit to the company.
Therefore, the correct response is D. The journal entry would include a debit to Logo and a credit to cash.
Journal entries should reflect the exchange of value between two accounts. When cash is paid, it decreases the company's cash balance, so cash should be credited. Since the logo is considered an asset, it should be debited to increase the asset account balance corresponding to the logo.