Using the gross method,record the payment of the following transaction in time to take the discount.Connect Company bought $5,000 of merchandise,terms 2/10,n/30,and uses the periodic inventory system:
A)debit Cash $5,000;credit Vouchers Payable $5,000.
B)debit Vouchers Payable $5,000;credit Cash $4,900;credit Purchases Discount $100.
C)debit Vouchers Payable $4,900;credit Cash $4,900.
D)debit Vouchers Payable $5,000;credit Cash $5,000.

Question

Quizplus · Accepted Answer

The gross method records the entire amount of the invoice initially, and then deducts the discount if payment is made within the discount period. Therefore, the transaction should be recorded as a debit to Vouchers Payable for the gross amount of $5,000, a credit to Cash for the discounted amount of $4,900, and a credit to Purchases Discount for the amount of the discount, which is $100.

Using the Gross Method,record the Payment of the Following Transaction