Pass the journal entry for the statement settled account payable in full
Answers
Explanation:
Well, by definition, a creditor is someone to whom money is owed.
Therefore, if you are paying a liability, the assumption is made that a previous journal entry has already been posted, which is to debit ‘something’ (operating expense, cost of sales, etc.) and to credit accounts payable.
The actual payment of cash then zeros (settles) the liability owed to the creditor.
Journal Entry:
DR A/P
CR Cash
Had you really meant ‘merchant’ and they simply showed up with the goods you ordered and said, “That’ll be $X,” you cutting them a check right methere on the spot would bypass the recording of the liability. You’d simply debit expense and credit cash.
DR Expense
CR Cash
This scenario would probably be much less frequent the the one described above