A company uses the perpetual inventory system and recorded the following entry: $\begin{array}{|l|r|r|}
\hline \text { Accounts Payable } & 2,500 & \
\hline \text { Merchandise Inventory } & & 50 \
\hline \text { Cash } & & 2,450 \
\hline
\end{array}$ This entry reflects a:
A) Purchase,
B) Return,
C) Sale,
D) Payment of the account payable and recognition of a cash discount taken,
E) Purchase and recognition of a cash discount taken,

Question

Quizplus · Accepted Answer

The entry reflects the payment of an account payable with a cash discount taken. The company reduces the accounts payable by $2,500, reduces cash by $2,450, and reduces merchandise inventory by $50, indicating a discount received.

A Company Uses the Perpetual Inventory System and Recorded the Following