On September 1, Dondra purchased $9,000 of inventory items on credit with the terms 1/15, net 30, FOB destination. Freight charges were $500. Payment for the purchase was made on September 18. Assuming Dondra uses the perpetual inventory system and the net method of accounting for purchase discounts, what amount is recorded on September 1 as accounts payable from this purchase?
A) $9,500
B) $9,410
C) $9,000
D) $8,910

Question

Quizplus · Accepted Answer

The net method records purchases at the net amount after discounts. The purchase discount is 1% of $9,000, which is $90. Therefore, the accounts payable recorded is $9,000 - $90 = $8,910. Freight charges are not included in accounts payable as they are FOB destination.

On September 1, Dondra Purchased $9,000 of Inventory Items on Credit