If spot co. purchases office supplies from sally supplies, inc.. spot does not pay cash for the purchase, and now owes the amount to sally. this transaction would typically be recorded in account payable account in spot's books.
Account payable can be defined as the money a company is yet to pay to their suppliers for the goods that was supplied to them.
Spot co is still owning sally supplies inc based on the fact that after receiving the goods the are yet to pay sally supplies inc which is why the transaction will be recorded as account payable in spot books and sally supplies inc will record it the transaction in their account as account receivables because they are yet to received the money for the goods they supplied to spot.co.
Which is why account payable is often treated as current liability under the balance sheet while account receivable is treated as current assets.
Therefore it will be record as account payable.
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