Question

On December 31, Jacoby Company received a $385 bill for the purchase of supplies in December that it will not pay for until January 15. Jacoby follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. The adjusting entry needed on December 31 to accrue this cost is:

Answer 1

Answer:

Supplies $385 (debit)

Accounts Payable $385 (credit)

Explanation:

Recognize the Assets of Supplies and also recognize the Liability :  Accounts Payable fort the amount owing that will be paid in the coming financial year.