Question

Q. prepare journal entries from the following business transaction?

Received a bill from western oil company for fuel used in january amounting to $4360 and payable by February 10.

Answer 1

Fuel is an expense and the fact that it was not paid off immediately means that it is an amount owed to Western Oil thereby making it an Accounts Payable.

Journal entry is:

Date Account title and Description Debit Credit

Fuel Expense $4,360

Accounts Payable $4,360