The journal entry for this transaction would:
Dr. Inventory $75,000
Cr. Accounts payable $75,000
What does purchase on account mean?
Purchase on account means that the inventory purchased was on credit basis, which means that Macomb corporation only promises to pay $75,000 owed due to inventory purchase at a later time.
The appropriate journal entry is to debit the inventory account, which is the receiving account where the accounts payable(representing the supplier) is credited since the giving account is to be credited.
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