A business received the current month's utility bill for $2,125,and immediately paid it.Which journal entry is prepared?
A)Debit Accounts Payable for $2,125 and credit Cash for $2,125.
B)Debit Utilities Payable for $2,125 and credit Cash for $2,125.
C)Debit Utilities Expense for $2,125 and credit Cash for $2,125.
D)Debit Operating Expense for $2,125 and credit Accounts Payable for $2,125.

Question

Quizplus · Accepted Answer

When a business receives the current month's utility bill and immediately pays it, a journal entry is made as a debit to Utilities Expense for the amount of the bill ($2,125) and a credit to Cash for the same amount. This entry reflects the use of utilities and the payment. Option A is incorrect because this entry involves Accounts Payable, which indicates that the amount owed has not yet been paid. Option B is incorrect because there is no such account as Utilities Payable. Option D is incorrect because Operating Expense is a general ledger account that is not specific to utilities.

A Business Received the Current Month's Utility Bill for $2,125,and