A company uses the perpetual inventory system and recorded the following entry: $\begin{array}{|l|r|r|}
\hline \text { Accounts Payable } & 2,500 & \
\hline \text { Merchandise Inventory } & & 50 \
\hline \text { Cash } & & 2,450 \
\hline
\end{array}$ This entry reflects a:
A)Purchase of merchandise on credit.
B)Return of merchandise.
C)Sale of merchandise on credit.
D)Payment of the account payable less a 2% cash discount taken.
E)Payment of the account payable less a 1% cash discount taken.

Question

Quizplus · Accepted Answer

The entry shows a payment of $2,450 against an accounts payable of $2,500, with $50 being credited to Merchandise Inventory. This indicates a cash discount of $50 was taken on the payment, which is 2% of $2,500, reflecting the payment of the account payable less a 2% cash discount.

A Company Uses the Perpetual Inventory System and Recorded the Following