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7 October, 01:04

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

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Answers (2)
  1. 7 October, 04:15
    0
    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.
  2. 7 October, 04:18
    0
    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.
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