Under the net method,when a company uses a perpetual inventory system,an invoice for $2,000 with terms of 2/10,n/30 should be recorded with a debit to Merchandise Inventory and a credit to Accounts Payable of $1,960.

Question

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The net method for recording purchases with discounts under a perpetual inventory system involves recording the purchase at the net amount after the discount is taken. In this case, the discount is 2% of $2,000, which is $40. Therefore, the invoice should be recorded with a debit to Merchandise Inventory for $1,960 and a credit to Accounts Payable for $1,960.

Under the Net Method,when a Company Uses a Perpetual Inventory