During January, Wells Corporation purchased $100,000 of inventory; they paid one-fourth in cash and signed a note for the remaining balance.
This transaction will be recorded as:
A) Inventory 100,000
Cash 75,000
Notes Payable 25,000
B) Inventory 100,000
Cash 25,000
Accounts Payable 75,000
C) Inventory 100,000
Accounts Payable 75,000
Cash 25,000
D) Inventory 100,000
Cash 25,000
Notes Payable 75,000

Question

Quizplus · Accepted Answer

Wells Corporation paid one-fourth of $100,000, which is $25,000, in cash and signed a note for the remaining three-fourths, which is $75,000. Therefore, the correct entry is to debit Inventory for the total purchase amount of $100,000, credit Cash for the amount paid of $25,000, and credit Notes Payable for the remaining balance of $75,000.

During January, Wells Corporation Purchased $100,000 of Inventory; They Paid