A firm that uses the perpetual inventory method purchases inventory of $1 000 on credit, including GST, with terms of 2/10, n/30. Which of the following entries would be made to record the payment if it is made within 10 days?
A)$980 debit to Accounts payable, a $20 debit to Inventory and a $1 000 credit to Cash
B)$18.18 debit to Inventory, a $1.82 debit to GST Clearing, a $1 000 debit to Accounts payable and a $1 020 credit to Cash
C)$1 000 debit to Accounts payable and a $1 000 credit to Cash
D)$1 000 debit to Accounts payable, a $18.18 credit to Inventory, a $1.82 credit to GST Clearing and a $980 credit to Cash

Question

Quizplus · Accepted Answer

The Answer of A firm that uses the perpetual inventory method purchases inventory of $1 000 on credit, including GST, with terms of 2/10, n/30. Which of the following entries would be made to record the payment if it is made within 10 days?
A)$980 debit to Accounts payable, a $20 debit to Inventory and a $1 000 credit to Cash
B)$18.18 debit to Inventory, a $1.82 debit to GST Clearing, a $1 000 debit to Accounts payable and a $1 020 credit to Cash
C)$1 000 debit to Accounts payable and a $1 000 credit to Cash
D)$1 000 debit to Accounts payable, a $18.18 credit to Inventory, a $1.82 credit to GST Clearing and a $980 credit to Cash

A Firm That Uses the Perpetual Inventory Method Purchases Inventory