Question

Able Graphics received a $400 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 Able Graphics make to record this transaction? Multiple Choice Utilities Expense 400 Cash 400 Cash 400 Utilities Expense 400 Utilities Expense 400 Accounts Payable 400 Accounts Payable 400 Utilities Expense 400 No journal entry is required

Answer 1

Electricity Bill is received for the current month it means expenses will be debited to revenue account and recording for expenses is done as below,

Utility Expenses            Debit $ 400

But electricity expenses is due for paid after the end of next month it means it will be payable after next month and this will be recorded as below,

Account Payable            Credit $ 400

So,

Answer = Option 3

Utility Expenses        Debit $ 400

Account Payable     Credit $ 400