A company using the perpetual inventory system purchased inventory worth $500,000 on account with terms of credit being 3/15, n/45. Defective inventory of $50,000 was returned 2 days later and the accounts were appropriately adjusted. If the company paid the invoice 25 days later, the journal entry to record the payment would be:
A)$500,000 debit to Accounts Payable and $500,000 credit to Cash.
B)$450,000 debit to Accounts Payable, $450,000 credit to Cash.
C)$500,000 debit to Accounts Payable ,$486,500 credit to Cash and $13,500 credit to Inventory.
D)$486,500 debit to Accounts Payable, $13,500 credit to Inventory and $450,000 credit to Cash.

Question

Quizplus · Accepted Answer

The company returned $50,000 of inventory, reducing the payable to $450,000. Since the payment was made after the discount period, no discount is applied, so the full $450,000 is paid.

A Company Using the Perpetual Inventory System Purchased Inventory Worth