A firm that uses the perpetual inventory method purchased $1,000 of inventory on terms 2/10, n/30. The journal entry to record this transaction would include a debit to

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When a firm uses the perpetual inventory method, purchases are recorded directly in the inventory account. Therefore, the journal entry to record the purchase would include a debit to Inventory for $1,000. There is no need to debit Purchases because it is an expense account used only in periodic inventory systems. There is also no need to debit Purchase Discounts at this time because the discount is only taken if payment is made within the discount period. Finally, the credit to Accounts Payable would be for the full amount of $1,000, since payment is due within 30 days.

A Firm That Uses the Perpetual Inventory Method Purchased $1,000