Consider the following short case as you respond to the next question: VLC Corporation sold merchandise with a cost of $200 on account for $300 to PRT Corporation; credit terms were 2 / 10, n / 30. VLC paid the outgoing freight charge of $10. PRT paid the invoice within the discount period.Assume VLC's general ledger showed a balance in cash of $600 before the preceding events; assume VLC's balance in inventory was also $600. Which of the following statements is most true?
A)After recording the preceding events, the balance in cash will be equal to the balance in inventory.
B)After recording the preceding events, the balance in cash will be greater than the balance in inventory.
C)After recording the preceding events, the balance in cash will be less than the balance in inventory.
D)After recording the preceding events, the balance in cash will equal the balance in accounts receivable.

Question

Quizplus · Accepted Answer

PRT paid $294 ($300 - 2% discount) and VLC paid $10 for freight, resulting in a net cash increase of $284. Inventory decreased by $200, so cash ($600 + $284 = $884) is greater than inventory ($600 - $200 = $400).

Consider the Following Short Case as You Respond to the Next