Paid $17,200 cash for cleaning supplies.

Question

BlackTom AI · Accepted Answer

The scenario presents a cash payment for cleaning supplies, which is an exchange of cash for an asset used in operations. 
Option 1: 'Dr. Accounts Receivable 17,200   Cr. Cash 17,200' would be used when the company is collecting on amounts owed by customers, not when buying supplies. Therefore this entry misstates the accounts involved.
Option 2: 'Dr. Supplies 17,200   Cr. Cash 17,200' aligns with the standard double-entry for purchasing supplies with cash: increase (debit) the Supplies asset account and decrease (credit) the Cash asset account. This correctly reflects the acquisition of supplies and the outflow of cash.
Option 3: 'Dr. Cash 17,200   Cr. Supplies 17,200' would imply paying cash to create a liability or reduce an expense in a way that decreases a cash asset and increases supplies with a credit to supplies, which reverses the normal direction for both accounts involved in a cash purchase of supplies.
Option 4: 'None of the above' would be valid only if none of the listed entries matched the correct transaction, but Option 2 correctly represents the proper debit and credit for this purchase.
In summary, the transaction requires debiting Supplies (to reflect the acquisition of an asset) and crediting Cash (to reflect the cash payment). The phrasing in Option 2 matches this requirement precisely, while the other options either involve the wrong accounts or invert the normal debit/credit directions for this scenario.

Paid $17,200 cash for cleaning supplies.

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