Briggs Corporation uses the perpetual inventory method.On March 1, it purchased $10,000 of inventory, terms 2/10, n/30.On March 3, Briggs returned goods that cost $1,000.On March 9, Briggs paid the supplier.On March 9, Briggs should credit
A)purchase discounts for $200.
B)inventory for $200.
C)purchase discounts for $180.
D)inventory for $180.

Question

Quizplus · Accepted Answer

When Briggs returned goods that cost $1,000, the amount of the purchase was reduced to $9,000. Then, when Briggs paid the supplier within the discount period, it received a discount of $180 ($9,000 x 2%). Therefore, the entry to record the payment would be to debit accounts payable for $8,820 ($9,000 - $1,000 - $180) and credit inventory for $9,000 and purchase discounts for $180. Thus, the correct choice is option D, to credit inventory for $180.

Briggs Corporation Uses the Perpetual Inventory Method