A company that uses the perpetual inventory system purchases inventory for $63,000 on account,with terms of 2/10,n/30.Which of the following is the journal entry to record the payment made within 10 days?
A)a debit to Accounts Payable for $63,000,a credit to Cash for $61,740,and a debit to Merchandise Inventory for $1,260
B)a debit to Accounts Payable for $63,000,a credit to Merchandise Inventory for $1,260,and a credit to Cash for $61,740
C)a debit to Merchandise Inventory for $1,260,a debit to Accounts Payable for $63,000,and a credit to Cash for $64,260
D)a debit to Accounts Payable for $61,740,a debit to Merchandise Inventory for $1,260,and a credit to Cash for $63,000

Question

Quizplus · Accepted Answer

The company receives a 2% discount for paying within 10 days, which is $1,260 ($63,000 * 2%). The journal entry debits Accounts Payable for the full amount of $63,000, credits Merchandise Inventory for the discount of $1,260, and credits Cash for the net amount paid of $61,740.

A Company That Uses the Perpetual Inventory System Purchases Inventory