On June 1, Addison Company purchased $9,000 of inventory on account from Garrison Company. Garrison offers a 5% discount if payment is received within 15 days. Addison records the purchase using the gross method and the perpetual inventory system. The journal entry on June 1 by Addison Company includes ________.
A) a debit to Inventory for $8,550
B) a credit to Accounts Payable for $8,550
C) a debit to Inventory for $9,000
D) a credit to Cash for $9,000

Question

Quizplus · Accepted Answer

Under the gross method, Addison Company records the purchase at the full invoice price of $9,000, debiting Inventory for $9,000.

On June 1, Addison Company Purchased $9,000 of Inventory on Account