A company purchased inventory for $3,000 from a vendor on account,FOB shipping point,with terms of 2/15,n/30.The company paid $100 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 $2,940 and a credit to Cash for $2,940
B)a debit to Accounts Payable for $3,000,a credit to Merchandise Inventory for $100,and a credit to Cash for $2,900
C)a debit to Accounts Payable for $3,000,a credit to Merchandise Inventory for $60,and a credit to Cash for $2,940
D)a debit to Accounts Payable for $2,940,a debit to Merchandise Inventory for $60,and a credit to Cash for $3,000

Question

Quizplus · Accepted Answer

Under a perpetual inventory system, when inventory is purchased FOB shipping point, the cost of freight in ($100) is added to the inventory cost. The terms 2/15, n/30 allow a 2% discount if paid within 15 days. The discount on $3,000 is $60 (2% of $3,000), so the payment is $2,940 ($3,000 - $60). The entry includes debiting Accounts Payable for the full invoice amount ($3,000), crediting Merchandise Inventory for the discount amount ($60) to reduce the inventory cost, and crediting Cash for the payment amount ($2,940).

A Company Purchased Inventory for $3,000 from a Vendor on Account,FOB