Satoor, Inc.Satoor, Inc., which uses a periodic inventory system, purchased merchandise from Taye Company on July 7 for $15,000. The credit terms were 1/10, n/30. The goods were shipped FOB shipping point on July 7. Satoor, Inc. received the merchandise on July 10 and paid the amount due on July 15.
-Refer to the information provided for Satoor, Inc. When the buyer records the payment on July 15th, its journal entry will include

Question

Quizplus · Accepted Answer

When the buyer pays the amount due on July 15th, it decreases its Accounts Payable by $15,000. Option A is incorrect because Purchases would have already been recorded when the merchandise was purchased on July 7th. Option B is incorrect because the discount of $150 would have been taken if paid by July 17th, resulting in a cost of $14,850. Option C is incorrect because Cash is debited for the amount paid, which is $15,000.