A company uses the perpetual inventory system and recorded the following entry:
Accounts Payable………………………… 2,500
Merchandise Inventory……………. 50 Cash………………………………... 2,450
This entry reflects a:
A)Purchase of merchandise on credit.
B)Return of merchandise.
C)Sale of merchandise on credit.
D)Payment of the account payable and recognition of a 2% cash discount taken.
E)Payment of the account payable and recognition of a 1% cash discount taken.

Question

Quizplus · Accepted Answer

The entry reflects the payment of an account payable of $2,500 with a cash discount of $50 (2% of $2,500), resulting in a cash payment of $2,450.

A Company Uses the Perpetual Inventory System and Recorded the Following