Using the gross method approach,record the payment of the following transaction in time to take the discount.Connect Company bought $4,000 of merchandise,terms 3/10,n/30:
A)debit Cash $4,000; credit Vouchers Payable $4,000.
B)debit Vouchers Payable $4,000; credit Cash $3,880; credit Purchases Discount $120.
C)debit Vouchers Payable $3,880; credit Cash $3,880.
D)debit Vouchers Payable $4,000; credit Cash $4,000.

Question

Quizplus · Accepted Answer

The gross method approach records the purchase at the full amount and then takes any available discounts when paid within the discount period. Option B correctly records the initial purchase of $4,000, debits Vouchers Payable, and also credits Cash for $3,880 (the amount paid within the discount period) and Purchases Discount for $120 (the amount of the discount taken).

Using the Gross Method Approach,record the Payment of the Following