Question

R&R Programming pays $900 supply bill that it had received earlier in the month. Illustrate how to record the transaction to the T-accounts by completing the following sentence.

Answer 1

To record a $900 payment of a supply bill, R&R Programming would debit Accounts Payable and credit Cash by $900 each, indicating a decrease in both liabilities and cash assets.

Step-by-step explanation:

When R&R Programming pays a $900 supply bill that it received earlier in the month, two T-accounts are affected: the Cash account and the Accounts Payable account. To record this transaction, we would:

• Debit the Accounts Payable account to decrease its balance, because a liability is being paid off.
• Credit the Cash account to decrease its balance, as cash is going out of the business.

The journal entry would look as follows:

• Accounts Payable (Debit) - $900
• Cash (Credit) - $900

This reflects that the company's liabilities have decreased by $900 due to the payment of the supply bill, while their cash assets have also decreased by the same amount because this is the amount that has been paid out.