On April 6,Lopez Co.purchased $5,000 of inventory,terms 1/15,n/30.Lopez Co.uses a perpetual inventory system.The company paid for the purchase on April 26.The entry to record the payment on April 26 includes which of the following?
A) A credit to Inventory for $50
B) A debit to Accounts Payable for $4,900
C) A credit to Accounts Payable for $5,000
D) A credit to Cash for $5,000

Question

Quizplus · Accepted Answer

Since the company uses a perpetual inventory system, the purchase of inventory was already recorded with a debit to the Inventory account. When the company paid for the purchase on April 26, it would need to credit Cash for the amount paid, which is $5,000. Option A is incorrect because no further adjustment is needed for the Inventory account. Option B is incorrect because it implies that the company still owes $4,900 to the supplier, but the payment has already been made. Option C is also incorrect because it would result in an overstatement of the company's liabilities, which is not accurate since the payment has been made. Therefore, the correct answer is Option D.