A company that uses the perpetual inventory system purchases inventory for $65,000 on account, with terms of 2/10, 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 $65,000 and a credit to Cash for $65,000 and a debit to Merchandise Inventory for $1,300
B)a debit to Accounts payable for $65,000, a credit to Merchandise Inventory for $1,300, and a credit to Cash for $63,700
C)a debit to Merchandise Inventory for $1,300, a debit to Accounts Payable for $65,000 and a credit to Cash for $66,300
D)a debit to Accounts Payable for $63,700, a debit to Merchandise Inventory for $1,300 and a credit to Cash for$65,000

Question

Quizplus · Accepted Answer

When using the perpetual inventory system, the journal entry to record the payment made within 10 days would be a debit to the Accounts payable account for the full amount of $65,000, a credit to Cash for the amount paid, which is $63,700 ($65,000 - $1,300 discount), and a credit to the Merchandise Inventory account for the amount of the discount taken, which is $1,300. Therefore, the correct answer is option B.

A Company That Uses the Perpetual Inventory System Purchases Inventory