A company uses the perpetual inventory system and recorded the following entry:
$$\begin{array} { | l | r | r | }
\hline \text { Accounts Payable } & 2,500 & \
\hline \text { Merchandise Inventory } & & 50 \
\hline \text { Cash } & & 2,450 \
\hline
\end{array}$$
This entry reflects a:

Question

A company uses the perpetual inventory system and recorded the following entry:
$$\begin{array} { | l | r | r | } 
\hline \text { Accounts Payable } & 2,500 & \
\hline \text { Merchandise Inventory } & & 50 \
\hline \text { Cash } & & 2,450 \
\hline
\end{array}$$
This entry reflects a:

Quizplus · Accepted Answer

The entry shows a reduction in Accounts Payable by $2,500, a cash outflow of $2,450, and an increase in Merchandise Inventory by $50. This indicates a payment of the account payable with a $50 discount taken, which is 2% of $2,500, thus reflecting a payment of the account payable less a 2% cash discount.

A Company Uses the Perpetual Inventory System and Recorded the Following