A creditor's account in the accounts payable ledger has a $1,600 beginning balance. After a transaction for $700 is posted from the purchases journal, the balance of the creditor's account is:
A)$900 credit.
B)$2,300 debit.
C)$2,300 credit.
D)$900 debit.

Question

Quizplus · Accepted Answer

The beginning balance of the creditor's account is $1,600 (credit balance). After a transaction for $700 is posted from the purchases journal, we need to add it to the beginning balance to get the new balance of the creditor's account.

$1,600 (beginning balance) + $700 (transaction) = $2,300 (new balance)

Since the transaction is a credit to the creditor's account (i.e., the company owes $700 to the creditor), the new balance is a credit balance of $2,300. Therefore, the correct answer is C: $2,300 credit.

A Creditor's Account in the Accounts Payable Ledger Has a $1,600