Flynn Company uses a perpetual inventory system and had the following transactions during November:
-November 6 - Purchased $5,800 of inventory on account, terms 2/10, n/30.
-November 8 - Returned $800 of defective units and received full credit.
-November 15 - Paid the amount due.
-Use the information above to answer the following question.What journal entry will be recorded by Flynn Company on November 15?
A) Debit Accounts Payable and credit Cash for $4,900
B) Debit Accounts Payable for $5,000, credit Purchase Discount for $100, and credit Cash for $4,900
C) Debit Accounts Payable for $5,000, credit Inventory for $100, and credit Cash for $4,900
D) Debit Accounts Payable for $4,900, credit Inventory for $100, and credit Cash for $4,800

Question

Quizplus · Accepted Answer

The original purchase was $5,800, but $800 was returned, leaving $5,000 payable. The payment was made within the discount period, so a 2% discount ($100) is applied, reducing the cash payment to $4,900. The discount reduces the inventory value.

Flynn Company Uses a Perpetual Inventory System and Had the Following