Question

On October 3, Nick Carter, a carpenter, received a cash payment for services previously billed to a client. Nick paid his telephone bill, and he also bought equipment on credit. For the three transactions, at least one of the entries will include a
A) credit to Nick Carter, Capital.
B) credit to Notes Payable.
C) debit to Accounts Receivable.
D) credit to Accounts Payable.

Answer 1

Answer:

D) credit to Accounts Payable.

Explanation:

The journal entries are shown below:

1. Cash A.c Dr

         To Account receivable A/c

(Being cash is received for performing the services)

2. Telephone expenses A/c

         To Cash A/c

(Being telephone bill paid)

3. Equipment A/c Dr

          To Accounts payable A/c

(Being equipment is purchased on credit)

According to these journal entries, the option D is correct