Journal Entry - Payment on Account
What would be the entries in the journal if the problem is like this: "made payments on account, 17,000.00" ?
Here is the entry for a payment on account:
Debit: Creditors/payables 17,000
Credit: Bank 17,000
Payment to creditor/payable Mr. Bla Bla
Remember that any time you have a payment it means you are losing money, which means less cash in the bank which means you credit this asset.
The corresponding entry, the debit, is to creditors. When you pay "on account" it means you are paying off an account (a debt) you have with someone. In other words you are paying off a creditor/payable.
As this is a payment the entry would be recorded in the cash payments journal (CPJ).
Hope that helps.
For more info check out the lesson on paying off an accrued expense (i.e. paying off a creditor).
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