Northlake Nordic Centre Inc. receives its December propane bill, $2,300, on 28 December. It is due on 15 January. Record it at 31 December.

Answer

Dr Utilities Expense 2300; Cr Accounts Payable 2300

Accounts - Utilities Expense - Accounts Payable - Cash - Prepaid Insurance The propane was used in December, so the expense is December’s — **Utilities Expense** (debit) — and the obligation exists now: **Accounts Payable** (credit) 2,300. The trap is recording nothing until it is paid in January, which understates both the expense and the liability at year end.

Hermanson Vol 1 ch 9 (current liabilities defined); Lyryx Intermediate FA Vol 1 §4.2; Dauderis & Annand §9.1–9.3; ASPE s.1510 (concept map L1–L2, L5)