Morgan,Inc.uses a perpetual inventory system and the net method of recording purchases.On May 12,a merchandise purchase of $15,000 was made on credit,2/10,n/30.The journal entry to record this purchase is:
A) $\begin{array}{|l|r|r|}
\hline \text { Merchandise Inventory } & 15,000 & \
\hline \text { Accounts Payable } & & 15,000 \
\hline
\end{array}$
B) $\begin{array}{|l|r|l|}
\hline \text { Accounts Payable } & 15,000 & \
\hline \text { Merchandise Inventory } & & 15,000 \
\hline
\end{array}$
C) $\begin{array}{|l|r|r|}
\hline \text { Purchases } & 15,000 & \
\hline \text { Accounts Payable } & & 15,000 \
\hline
\end{array}$
D) $\begin{array}{|l|r|r|}
\hline \text { Purchases } & 14,700 & \
\hline \text { Accounts Payable } & & 14,700 \
\hline
\end{array}$
E) $\begin{array}{|l|r|r|}
\hline \text { Merchandise Inventory } & 14,700 & \
\hline \text { Accounts Payable } & & 14,700 \
\hline
\end{array}$

Question

Quizplus · Accepted Answer

Since Morgan, Inc. uses the net method of recording purchases, the purchase is recorded at its net amount after discount (2% of $15,000 = $300), so the entry is for $14,700, not the gross amount of $15,000. This is reflected in the Merchandise Inventory and Accounts Payable accounts.

Morgan,Inc Merchandise Inventory 15,000 Accounts Payable 15,000\begin{array}{|l|r|r|}\hline \text { Merchandise Inventory } & 15,000 & \\\hline \text { Accounts Payable } & & 15,000 \\\hline\end{array} Merchandise Inventory Accounts Payable ​15,000​15,000​​

Morgan,Inc $\begin{array}{|l|r|r|}\hline \text { Merchandise Inventory } & 15,000 & \\\hline \text { Accounts Payable } & & 15,000 \\\hline\end{array}$