Payment discounts received on merchandise purchased for resale under the perpetual inventory method are subtracted from

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Payment discounts received on merchandise purchased for resale are considered a reduction in the cost of the inventory. Therefore, the discount is subtracted from Merchandise Inventory. This is consistent with the perpetual inventory method in which the cost of the inventory is updated continuously, and discounts are applied to the cost of inventory.

Payment Discounts Received on Merchandise Purchased for Resale Under the Perpetual