A company paid $500 cash for a new printer. the entry to record this transaction would include a Credit to cash.
To show that the supplier has received payment, the amount is deducted from their accounts payable account. It will thereafter be assigned to an invoice that is posted to the supplier's account. The business has paid for cash, and it has to be added to the cash asset account.
When a company pays a supplier cash but the money is not credited to a specific supplier invoice or the supplier has not yet received an invoice, a paid cash on account journal entry is required. Consider a scenario where a company requests design services and pays a provider $2,000 in cash.
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