Sonia is the head of the accounts department in a small manufacturing company. The company follows the accrual-basis method of accounting. It recently purchased raw materials worth $5,000 from its vendors. However, the company paid only $3,000 to its vendors. It plans to pay the remaining amount after three months. Considering this information, which entry should Sonia record in the company's accounts?

A.

$5,000 as accounts receivable

B.

$3,000 as accounts payable

C.

$2,000 as accounts payable

D.

$2,000 as accounts receivable

E.

$3,000 as accounts receivable

Question

Tobias Flynn

Business

16 November, 12:36

Sonia is the head of the accounts department in a small manufacturing company. The company follows the accrual-basis method of accounting. It recently purchased raw materials worth $5,000 from its vendors. However, the company paid only $3,000 to its vendors. It plans to pay the remaining amount after three months. Considering this information, which entry should Sonia record in the company's accounts?

A.

$5,000 as accounts receivable

B.

$3,000 as accounts payable

C.

$2,000 as accounts payable

D.

$2,000 as accounts receivable

E.

$3,000 as accounts receivable

+4

Answers (1)

Know the Answer?

Edith Sanford · Answer 1

Answer

C. $2000 as account payable

Explanation

In accrual-basis method of accounting, accrued wage entry is intended to record the amount of wages owed to workers. In this case, the company only paid $3000 with a balance amount of $2000 from the initial purchase worth $5000. The remaining $2000 will serve as the account payable because the goods are on credit.