Which of the following journal entries correctly records Aracel Engineering's purchase of office supplies on account in June for \$1,200?

• A. Debit Office Supplies \$1,200; Credit Accounts Payable \$1,200
• B. Debit Cash \$1,200; Credit Office Supplies \$1,200
• C. Debit Accounts Payable \$1,200; Credit Office Supplies \$1,200
• D. Debit Office Supplies \$1,200; Credit Cash \$1,200

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the transaction. Aracel Engineering is purchasing office supplies on account, meaning they are not paying cash immediately but instead creating a liability (Accounts Payable). This transaction involves two accounts: Office Supplies (an asset account) and Accounts Payable (a liability account).
2. Step 2: Determine the impact on the accounts. The purchase of office supplies increases the Office Supplies account, which is debited to reflect the increase in assets. Since the purchase is on account, Accounts Payable increases, which is credited to reflect the increase in liabilities.
3. Step 3: Recall the accounting equation: Assets = Liabilities + Equity. This transaction affects both assets (Office Supplies) and liabilities (Accounts Payable), keeping the equation balanced.
4. Step 4: Write the journal entry. The correct journal entry is: Debit Office Supplies \$1,200 (to increase the asset account) and Credit Accounts Payable \$1,200 (to increase the liability account).
5. Step 5: Eliminate incorrect options. The other options involve incorrect accounts or payment methods (e.g., using Cash instead of Accounts Payable), which do not align with the transaction described. Focus on the correct accounts and their respective debit/credit rules.