A company that uses the perpetual inventory system purchases inventory for $61,000 on account,with terms of 3/10,n/30.Which of the following is the journal entry to record the payment made within 10 days?
A)a debit to Accounts Payable for $61,000,a credit to Cash for $59,170,and a debit to Merchandise Inventory for $1,830
B)a debit to Accounts Payable for $61,000,a credit to Merchandise Inventory for $1,830,and a credit to Cash for $59,170
C)a debit to Merchandise Inventory for $1,830,a debit to Accounts Payable for $61,000,and a credit to Cash for $62,830
D)a debit to Accounts Payable for $59,170,a debit to Merchandise Inventory for $1,830,and a credit to Cash for $61,000

Question

Quizplus · Accepted Answer

The company receives a 3% discount for paying within 10 days, which is $1,830 ($61,000 x 3%). The journal entry debits Accounts Payable for the full amount of $61,000, credits Merchandise Inventory for the discount of $1,830, and credits Cash for the net amount paid of $59,170 ($61,000 - $1,830).

A Company That Uses the Perpetual Inventory System Purchases Inventory