On Dec 28th Victor received the Utility bill for the month of December. He has not yet paid it but plans to pay it on January 5th. It was for $280. What do i debit and credit to utility expense and utilities?
i think you debit the utilitie expense and credit cash because you are going to pay cash, which cash is decreasing so it goes on the credit side.
thanks would i debit $280?
To accurately record the utility bill for the month of December and the corresponding payment you plan to make in January, you would need to make the following debit and credit entries:
1. Debit the "Utility Expense" account:
This account is debited to recognize the expense related to the utility bill. It represents the amount that is owed for the services consumed during December. Since the amount of the bill is $280, you would debit the "Utility Expense" account for $280.
2. Credit the "Utilities Payable" account:
This account is credited to record the liability you owe for the utility bill. It represents the amount that needs to be paid in the future. Since the bill is not yet paid, you would credit the "Utilities Payable" account for $280.
When you make the payment on January 5th, you will then need to make the following entries:
3. Debit the "Utilities Payable" account:
This account is debited to reduce the liability and indicate that the payment has been made. You would debit the "Utilities Payable" account for $280.
4. Credit the "Cash" account:
This account is credited to record the outflow of cash. It represents the actual payment made. You would credit the "Cash" account for $280.
Overall, the journal entries would be as follows:
Initial Entry on Dec 28th:
- Debit: Utility Expense ($280)
- Credit: Utilities Payable ($280)
Payment Entry on Jan 5th:
- Debit: Utilities Payable ($280)
- Credit: Cash ($280)
These entries accurately reflect the recognition of the expense and the subsequent payment for the utility bill.