Assume that a company records purchases net of discount. If the company bought merchandise valued at $10,000 on credit terms 3/15, n/30, the entry to record a payment for half of the purchase within the discount period would include a debit to:
A) Accounts payable for $4,850 and a credit to cash for $4,850
B) Accounts payable for $5,000 and a credit to cash for $5,000
C) Accounts payable for $4,850 and to interest expense for $150, and a credit to cash for $5,000
D) Accounts payable for $5,000 and to interest revenue for $150 and to cash for $4,850

Question

Quizplus · Accepted Answer

The correct entry for a payment within the discount period for half of the purchase ($10,000) would be to debit Accounts Payable for $4,850, reflecting the 3% discount on $5,000 (half of the purchase), and credit Cash for the same amount, $4,850.

Assume That a Company Records Purchases Net of Discount