Connect Company bought $4,000 of merchandise from Woods Corporation,terms 3/10,n/30.The journal entry to record the payment under the gross method approach after the discount period would be to:
A)debit Vouchers Payable $4,000; credit Cash $4,000.
B)debit Vouchers Payable $4,000; credit Discounts Lost $120; credit Cash $3,880.
C)debit Vouchers Payable $3,880; credit Cash $3,880.
D)debit Vouchers Payable $3,880; debit Discounts Lost $120; credit Cash $4,000.

Question

Quizplus · Accepted Answer

Under the gross method, purchases are recorded at their full amount. If a payment is made after the discount period, the full amount is paid without taking any discount. Therefore, the entry is to debit Vouchers Payable and credit Cash for the full amount of $4,000.

Connect Company Bought $4,000 of Merchandise from Woods Corporation,terms 3/10,n/30