A company uses the perpetual inventory system and recorded the following entry: $$\begin{array} { | l | r | r | }
\hline \text { Accounts Payable } & 2,500 & \
\hline \text { Merchandise Inventory } & & 50 \
\hline \text { Cash } & & 2,450 \
\hline
\end{array}$$ This entry reflects a:
A) Return of merchandise.
B) Payment of the account payable less a 1% cash discount taken.
C) Payment of the account payable less a 2% cash discount taken.
D) Sale of merchandise on credit.
E) Purchase of merchandise on credit.

Question

A company uses the perpetual inventory system and recorded the following entry: $$\begin{array} { | l | r | r | } 
\hline \text { Accounts Payable } & 2,500 & \
\hline \text { Merchandise Inventory } & & 50 \
\hline \text { Cash } & & 2,450 \
\hline
\end{array}$$ This entry reflects a:
A) Return of merchandise.
B) Payment of the account payable less a 1% cash discount taken.
C) Payment of the account payable less a 2% cash discount taken.
D) Sale of merchandise on credit.
E) Purchase of merchandise on credit.

Quizplus · Accepted Answer

The entry reflects a payment of the account payable of $2,500 with a 2% cash discount taken, which is $50. The remaining $2,450 is paid in cash.

A Company Uses the Perpetual Inventory System and Recorded the Following