On June 1,Kennedy Company purchased $5,000 of inventory on account from Sterner Company.Sterner Company offers a 3% discount if payment is received within 15 days.Kennedy Company records the purchase using the net method and the perpetual inventory system.The journal entry on June 1 by Kennedy Company includes ________.
A)a debit to Inventory for $5,000
B)a credit to Accounts Payable for $5,000
C)a credit to Cash for $4,850
D)a debit to Inventory for $4,850

Question

Quizplus · Accepted Answer

Under the net method, Kennedy Company records the inventory purchase at the net amount, considering the discount. Therefore, the inventory is debited for $4,850, which is $5,000 minus the 3% discount.

On June 1,Kennedy Company Purchased $5,000 of Inventory on Account