The company uses the periodic inventory system and the voucher system.If the net method is applied,the purchase of $7,000 of merchandise with terms 4/15,n/60 is recorded by:
A)debit Cash $7,000;credit Accounts Payable $7,000.
B)debit Accounts Payable $7,000;credit Purchases $7,000.
C)debit Purchases $6,720;credit Accounts Payable $6,720.
D)debit Purchases $6,720;credit Vouchers Payable $6,720.

Question

Quizplus · Accepted Answer

Under the net method, purchases are recorded at the net amount, considering the discount. The discount is 4% of $7,000, which is $280, so the net purchase amount is $6,720. In a voucher system, the liability is recorded as Vouchers Payable.

The Company Uses the Periodic Inventory System and the Voucher