On March 15, 20X1, Jack Company purchased $5,000 of merchandise on credit subject to terms 2/10, n/20. The periodic inventory system is used. If Jack pays for these goods on March 30, the entry made to record the payment should include which of the following?

Question

Quizplus · Accepted Answer

Since Jack pays for the goods on March 30, which is beyond the discount period (2/10, n/20), he does not get the discount and must pay the full amount of $5,000. Therefore, the entry includes a debit of $5,000 to Trade Payables to record the payment of the full invoice amount.

On March 15, 20X1, Jack Company Purchased $5,000 of Merchandise