The entry to record a purchase of $12,000 in merchandise assuming terms of 2/10,n/30 and a periodic inventory system would include a(n)
A)increase to Accounts Payable for $12,000.
B)increase to Purchases Discounts for $240.
C)decrease to Purchases for $12,000.
D)decrease to Accounts Payable for $11,760.

Question

Quizplus · Accepted Answer

Under the periodic inventory system, purchases are recorded as an increase to the Purchases account. The terms of 2/10, n/30 mean that the buyer can receive a 2% discount if payment is made within 10 days, otherwise the full amount is due within 30 days. Therefore, since the buyer did not take advantage of the discount, the entire amount of $12,000 is recorded as an increase to Accounts Payable. There is no record of a purchase discount since the discount was not taken.

The Entry to Record a Purchase of $12,000 in Merchandise