On July 1,B. Darin Company sold merchandise costing $4,500 to S. Dee Company for $6,000, terms 2/10, n/30. Both companies use the perpetual inventory system. S. Dee Company pays the invoice on July 8 and takes the appropriate discount. What is the journal entry that S. Dee Company will make on July 8?

Question

On July 1,B. Darin Company sold merchandise costing $4,500 to S. Dee Company for $6,000, terms 2/10, n/30. Both companies use the perpetual inventory system. S. Dee Company pays the invoice on July 8 and takes the appropriate discount. What is the journal entry that S. Dee Company will make on July 8?
On July 1,B. Darin Company sold merchandise costing $4,500 to S. Dee Company for $6,000, terms 2/10, n/30. Both companies use the perpetual inventory system. S. Dee Company pays the invoice on July 8 and takes the appropriate discount. What is the journal entry that S. Dee Company will make on July 8? A) Option A B) Option B C) Option C D) Option D

Quizplus · Accepted Answer

S.De Company is making a payment for the merchandise purchased on credit and is availing the discount offered. 
The journal entry will be:
Accounts Payable - B. Darin Company $5,880 ([$6,000 less 2% discount of $120])
Cash $5,880