On February 20, 20X1, Ross Sound Company purchased $10,000 of stereo equipment for resale on credit, subject to the terms 3/15, n/30. The periodic inventory system is used. If the company paid for these goods on March 20, the entry made to record the payment should include which of the following?

Question

Quizplus · Accepted Answer

Since the company paid for the goods on March 20, which is beyond the discount period of 15 days (3/15, n/30), they would not be able to take advantage of the 3% purchase discount. Therefore, the full amount of $10,000 is due, and the entry to record the payment would include a $10,000 debit to Trade Payables to reduce the liability.

On February 20, 20X1, Ross Sound Company Purchased $10,000 of Stereo