A check drawn by a company for $340 in payment of a liability was recorded in the journal as $430. What entry is required in the company's accounts?
A) debit Accounts Payable; credit Cash
B) debit Cash; credit Accounts Receivable
C) debit Cash; credit Accounts Payable
D) debit Accounts Receivable; credit Cash

Question

Quizplus · Accepted Answer

Since the check was recorded for a higher amount than the actual liability, the company's Cash account and Accounts Payable account need to be adjusted. The correct entry would be to debit Accounts Payable (to decrease the amount owed) and credit Cash (to decrease the Cash balance). Therefore, the correct choice is C.

A Check Drawn by a Company for $340 in Payment