A company that uses the perpetual inventory method purchases inventory of $2,000 on account FOB shipping point, with terms of 2/10 net/30. The seller prepays $100 of transportation costs and bills the company. Which of the following entries would be made to record full payment to the seller if the payment is made within 10 days?
A) The accounting entry would be a $2,100 debit to Accounts payable and a $2,100 credit to Cash.
B) The accounting entry would be a $2,100 debit to Accounts payable, a $42 credit to Inventory and a $2,058 credit to Cash.
C) The accounting entry would be a $2,100 debit to Accounts payable, a $40 credit to Inventory and a $2,060 credit to Cash.
D) The accounting entry would be a $2,060 debit to Accounts payable, a $40 debit to Inventory and a $2,100 credit to Cash.

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The Answer of A company that uses the perpetual inventory method purchases inventory of $2,000 on account FOB shipping point, with terms of 2/10 net/30. The seller prepays $100 of transportation costs and bills the company. Which of the following entries would be made to record full payment to the seller if the payment is made within 10 days?
A) The accounting entry would be a $2,100 debit to Accounts payable and a $2,100 credit to Cash.
B) The accounting entry would be a $2,100 debit to Accounts payable, a $42 credit to Inventory and a $2,058 credit to Cash.
C) The accounting entry would be a $2,100 debit to Accounts payable, a $40 credit to Inventory and a $2,060 credit to Cash.
D) The accounting entry would be a $2,060 debit to Accounts payable, a $40 debit to Inventory and a $2,100 credit to Cash.

A Company That Uses the Perpetual Inventory Method Purchases Inventory