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27 October, 11:00

On January 12, JumpStart purchased $870 in office supplies. (a) Journalize the transaction as if JumpStart paid cash. Jan. 12 (b) Journalize the transaction as if JumpStart placed it on account. Jan. 12 (c) On January 18, JumpStart pays the amount due. Journalize this event. Jan. 18

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  1. 27 October, 11:09
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    Part a : If JumpStart paid cash

    Office Supplies $870 (debit)

    Cash $870 (credit)

    Part b : If JumpStart placed it on account

    Office Supplies $870 (debit)

    Account Payable $870 (credit)

    Part c : If JumpStart pays the amount due

    Account Payable $870 (debit)

    Cash $870 (credit)

    Explanation:

    Part a : If JumpStart paid cash

    Recognise an expense for Office Supplies and reduce the assets of cash to reflect outflow of economic benefits in form of cash

    Part b : If JumpStart placed it on account

    Recognize an expense for Office Supplies and also recognise a Liability - Accounts Payable to reflect a present obligation created by JumpStart to its Supplier

    Part c : If JumpStart pays the amount due

    Derecognise the Liability - Accounts receivable since the liability has been settled and reduce the assets of cash to reflect outflow of economic benefits in form of cash due to settlement of Account
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