Christian Company uses the gross method of recording purchase discounts on inventory and the perpetual inventory system. When Christian Company makes payment for the inventory within the discount period, the bookkeeper will ________.
A) debit Accounts Payable, credit Inventory and credit Cash
B) debit Accounts Payable and credit Inventory
C) debit Inventory and credit Cash
D) debit Accounts Payable and credit Purchases

Question

Quizplus · Accepted Answer

When payment is made within the discount period, Accounts Payable is debited for the full invoice amount, Inventory is credited for the discount amount, and Cash is credited for the net amount paid.

Christian Company Uses the Gross Method of Recording Purchase Discounts