A business makes a cash payment of 12000 to a creditor Which

A business makes a cash payment of $12,000 to a creditor. Which of the following accounts is credited?

Solution

Answer:

The Transaction of making payment to Creditor in Cash of $12,000 will be recorded by Debiting Accounts Payable / Creditor, as the Liabilities are decreased and Crediting Cash for $12,000 as Assets are decreased.

The Journal Entry to record the transaction :

Accounts Payable 12,000
Cash 12,000