Travis Corporation purchases merchandise on account from Jackson Company, terms 2/10, n/30.Travis and Jackson both use periodic inventory systems.If Travis pays within the discount period, Travis will
A)debit the amount of the discount to Purchases.
B)credit the amount of the discount to Cash.
C)credit the amount of the discount to Inventory.
D)credit the amount of the discount to Purchases Discounts.

Question

Quizplus · Accepted Answer

In a periodic inventory system, when a purchase discount is taken, it is recorded as a credit to Purchases Discounts, which is a contra account to Purchases.

Travis Corporation Purchases Merchandise on Account from Jackson Company, Terms