A company that uses the net method of recording invoices made a purchase of $400 with terms of 2/10, n/30. The entry to record the purchase would include:
A) A debit to Merchandise Inventory for $392.
B) A credit to Discounts Lost for $8.
C) A credit to Cash for $392.
D) A debit to Discounts Lost for $8.
E) A debit to Cash for $392.

Question

Quizplus · Accepted Answer

The net method records purchases at the net amount (after discount), so $400 less 2% ($8) equals $392, which is debited to Merchandise Inventory.

A Company That Uses the Net Method of Recording Invoices