Question

Russell Co. received a $680 utility bill for the current month's electricity. It is not due until the end of the next month which is when they intend to pay it. Which of the following general journal entries will Russell Co. make to record the receipt of the bill?
a. Utilities Expense 400
Accounts Payable 400

b. Accounts Payable 400
Utilities Expense 400

c. No journal entry is required.

d. Cash 400
Utilities Expense 400

e. Utilities Expense 400
Accounts Receivable 400

Answer 1

The correct options are :

a. Utilities Expense 680

Accounts Payable 680

b. Accounts Payable 680

Utilities Expense 680

c. No journal entry is required.

d. Cash 680

Utilities Expense 680

e. Utilities Expense 680

Accounts Receivable 680

Answer:

a. Debit Utilities Expense $680

Credit Accounts Payable $680

Explanation:

Russel Co has received a utility bill for the current month but they intend to pay next month.

Since the expense is for this month it must be recognised now. So there will be a debit to the Utilities Expense account for $680.

The payment is not being made now but in the next month. This is an amount the business owes so it will be recorded as a credit to Accounts Payable of $680

Accounts payable is used to record monies that the business owes its creditors. Payments are due at a future date.

Answer 2

Answer:

Debit Utilities Expense 680

Credit Accounts Payable 680

Explanation:

Russell Co. Journal entry to record the receipt of the bill will be:

Debit Utilities Expense 680

Credit Accounts Payable 680

Since Russell Co. received a $680 utility bill which is not yet due until the end of the next month which means we have to Debit Utilities Expense with 680 which is the amount not yet due and Credit Accounts Payable with the same amount .