Accounting · General Ledger Accounting
During its accounting year ended 30 April 20X1, Earth Co agreed with Trader Co, from whom it both purchased goods and sold goods on credit terms, to contra an amount of $1,500 off the balances due to each other. What accounting entries should Earth Co make in its general ledger to record this situation?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Debit Purchases $1,500; Credit Sales $1,500
- 2Debit Sales $1,500; Credit Purchases $1,500
- 3Debit Trade Payables $1,500; Credit Trade Receivables $1,500✓
- 4Debit Trade Receivables $1,500; Credit Trade Payables $1,500
Correct answer
Debit Trade Payables $1,500; Credit Trade Receivables $1,500
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