Under the perpetual inventory system, a company purchases merchandise on terms 2/10, n/30. The entry to record the purchase will include a debit to Cash and a credit to Sales.

Question

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The entry to record the purchase under perpetual inventory system will include a debit to Purchases and a credit to Accounts Payable (or Cash if paid within the discount period). There will be no credit to Sales as sales have not yet been made.

Under the Perpetual Inventory System, a Company Purchases Merchandise on Terms