Journal Entry To Clear Accounts Payable

The journal entry to write off or clear or close or to remove Accounts Payable / Creditors Account from the books of accounts is recorded when we paid full amount to our suppliers / vendors or sundry creditors for goods purchased on credit or account. Now, actually, the company paid off (paid in full) its current liability.

Following entry is recorded to clear accounts payable:

                   Accounts Payable a/c  XXX

 

                                                     Cash a/c / Bank a/c  XXX

 

                                (Write Off Accounts Payable During The Period)

As the favorable balance of accounts payable is credit, so to close it we debit it and as we paid cash or check / cheque to our suppliers, so we credit cash or bank account as it had decreased.