Double-entry for creditor payment

Steps:

• Identify transaction: Cheque payment settles debt to credit supplier (creditor).
• Reduce liability: Debit purchases ledger account to decrease amount owed.
• Record outflow: Credit bank account to show cash leaving business.
• Balance entries: Debit and credit totals equal, maintaining double-entry rule.

Why C is correct:

• Double-entry principle requires debiting the creditor account (purchases ledger) to reduce liability and crediting bank to reduce asset, per accounting equation (Assets = Liabilities + Equity).

Why the others are wrong:

• A: Reverses entries—increases liability (wrong) and decreases bank (partial but incorrect direction).
• B: Involves sales ledger (debtors), irrelevant to paying suppliers.
• D: Debits sales ledger (increases receivables), unrelated to supplier payment.

Final answer: C