A company that uses the perpetual inventory system purchases inventory for $62,000 on account,with terms of 2/10,n/30.Which of the following is the journal entry to record the payment made within 10 days?
A)a debit to Accounts Payable for $62,000,a credit to Cash for $1,240,and a credit to Merchandise Inventory for $60,760
B)a debit to Accounts Payable for $62,000,a credit to Merchandise Inventory for $1,240,and a credit to Cash for $60,760
C)a debit to Merchandise Inventory for $1,240,a debit to Accounts Payable for $62,000,and a credit to Cash for $63,240
D)a debit to Accounts Payable for $60,760,a debit to Merchandise Inventory for $1,240,and a credit to Cash for $62,000

Question

Quizplus · Accepted Answer

The correct journal entry for a payment made within the discount period under a perpetual inventory system involves debiting Accounts Payable for the full invoice amount ($62,000), crediting Merchandise Inventory for the discount amount ($1,240, which is 2% of $62,000), and crediting Cash for the net payment made after the discount ($60,760). This reflects the reduction in inventory cost due to the payment discount.

A Company That Uses the Perpetual Inventory System Purchases Inventory