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JAMB Principles of Accounts 2024 Question 30

Question 30

Double Entry and the Ledger

Use the information below to answer questions 29 and 30.
July 1 – Started business with ₦10,500
July 31 – paid Agromachinex ₦6,000 owing them
The double entry for July 31 would be

  1. A.debit equipment and credit Agromachinex
  2. B.debit Agromachinex and credit cash
  3. C.credit capital and debit cash
  4. D.credit cash and debit purchases
Show the answer and explanation

Answer: B (debit Agromachinex and credit cash)

Explanation

Paying a creditor reduces what is owed (debit Agromachinex) and reduces cash (credit cash).