Grant's Hardware bought $12,000 of merchandise, terms 1/10, n/30. The company uses the periodic inventory system and the voucher system. The journal entry to record the transaction under the net approach method would be to:
A) debit Purchases $11,880; credit Accounts Payable $11,880.
B) debit Purchases $11,880; credit Vouchers Payable $11,880.
C) debit Purchases $12,000; credit Vouchers Payable $11,880; credit Discounts Lost $120.
D) debit Purchases $12,000; credit Cash $12,000.

Question

Quizplus · Accepted Answer

Under the net approach method, the purchase is recorded at the net amount after discount ($12,000 - $120 = $11,880), assuming the discount will be taken. Therefore, Purchases are debited for $11,880, and Vouchers Payable are credited for $11,880.

Grant's Hardware Bought $12,000 of Merchandise, Terms 1/10, N/30