What is the journal entry for Torres, Inc. when purchasing $4,800 of inventory on account?

When purchasing inventory on account, the accounting treatment involves recognizing the asset being acquired and the liability incurred for that purchase. In this case, Torres, Inc. is acquiring $4,800 worth of inventory.

The journal entry reflects this transaction by debiting the Inventory account, which increases the asset on the balance sheet, signifying that the company has gained more resources to sell in the future. Simultaneously, crediting Accounts Payable acknowledges the company's obligation to pay for this inventory in the future. This results in recognizing the company's debt arising from the purchase.

This entry captures the essence of accrual accounting, where transactions are recorded when they occur rather than when cash changes hands. Thus, the correct journal entry accurately reflects both the increase in inventory and the corresponding liability created by purchasing the inventory on account.