On December 31, Jacoby Company received a $385 bill for the purchase of supplies in December that it will not pay for until January 15. Jacoby follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. The adjusting entry needed on December 31 to accrue this cost is:
A. Debit Accounts Payable $385; credit Cash $385.
B. Debit Supplies Expense $385; credit Supplies $385.
C. Debit Supplies $385; credit Accounts Payable $385.
D. Debit Accounts Payable $385; credit Supplies $385.
E. Debit Supplies Expense $385; credit Cash $385.
Answer: C
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