Concept:Paying a creditor reduces both the amount owed and the cash available, so the creditor account is debited and cash is credited.
Explanation:On July 31, the business paid Agro Machine x the sum of
₦6,000 that it owed.
This is a settlement of a liability, meaning the business no longer owes Agro Machine x that amount.
In double entry, a decrease in a liability is recorded on the debit side of the liability account.
Therefore, debit the creditor account, Agro Machine x.
At the same time, cash is leaving the business, so cash decreases.
A decrease in an asset is recorded on the credit side of the cash account.
Thus, credit the cash account with
₦6,000.
The correct entry is: debit Agro Machine x and credit cash.
Answer:A. debit Agro Machine x and credit cash