A company purchased inventory for $4,000 from a vendor on account,FOB shipping point,with terms of 2/15,n/30.The company paid $200 cash for freight in.The entry to record the payment of the invoice within 15 days of the invoice date by the purchaser would include ________.(Assume a perpetual inventory system.)
A) a debit to Accounts Payable for $3,920 and a credit to Cash for $3,920
B) a debit to Accounts Payable for $4,000, a credit to Merchandise Inventory for $200, and a credit to Cash for $3,800
C) a debit to Accounts Payable for $4,000, a credit to Merchandise Inventory for $80, and a credit to Cash for $3,920
D) a debit to Accounts Payable for $3,920, a debit to Merchandise Inventory for $80, and a credit to Cash for $4,000

Question

Quizplus · Accepted Answer

The correct entry includes debiting Accounts Payable for $4,000 (the original amount), crediting Merchandise Inventory for $80 (the 2% discount on $4,000), and crediting Cash for $3,920 (the net amount paid after the discount).

A Company Purchased Inventory for $4,000 from a Vendor on Account,FOB