If the net approach method is applied,the purchase of $2,000 of merchandise with terms 2/10,n/30 is recorded by:
A)debit Cash $2,000; credit Accounts Payable $2,000.
B)debit Accounts Payable $2,000; credit Purchases $2,000.
C)debit Purchases $2,000; credit Accounts Payable $2,000.
D)debit Purchases $1,960; credit Vouchers Payable $1,960.

Question

Quizplus · Accepted Answer

According to the net approach method, if payment is made within the discount period, a discount is taken; otherwise, the full amount is paid. In this case, the discount is 2% of $2,000, which is $40. Therefore, the amount paid within the discount period would be $1,960 ($2,000 - $40). This is recorded by debiting Purchases for $1,960 and crediting Vouchers Payable for $1,960.

If the Net Approach Method Is Applied,the Purchase of $2,000