Connect Company bought $13,000 of merchandise from Woods Corporation, terms 2/10, n/30. Connect Company uses the voucher system and the periodic inventory method. The journal entry to record the payment under the gross method after the discount period would be to:
A) debit Vouchers Payable $13,000; credit Cash $13,000.
B) debit Vouchers Payable $13,000; credit Purchases Discount $260; credit Cash $12,740.
C) debit Vouchers Payable $12,740; credit Cash $12,740.
D) debit Vouchers Payable $12,740; debit Purchases Discount $260; credit Cash $13,000.

Question

Quizplus · Accepted Answer

Under the gross method, the purchase is initially recorded at its gross amount. If the payment is made after the discount period, the full amount is paid without taking any discount. Therefore, the entry is to debit Vouchers Payable for $13,000 and credit Cash for $13,000.

Connect Company Bought $13,000 of Merchandise from Woods Corporation, Terms