A company that uses the perpetual inventory system purchases inventory for $64,000 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 $64,000, a credit to Merchandise Inventory for $1280, and a credit to Cash for $62,720

B) a debit to Accounts Payable for $62,720, a debit to Merchandise Inventory for $1280, and a credit to Cash for $64,000

C) a debit to Accounts Payable for $64,000, a credit to Cash for $1280, and a credit to Merchandise Inventory for $62,720

D) a debit to Merchandise Inventory for $1280, a debit to Accounts Payable for $64,000, and a credit to Cash for $65,280

Question

Colonel

Business

17 March, 00:03

A company that uses the perpetual inventory system purchases inventory for $64,000 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 $64,000, a credit to Merchandise Inventory for $1280, and a credit to Cash for $62,720

B) a debit to Accounts Payable for $62,720, a debit to Merchandise Inventory for $1280, and a credit to Cash for $64,000

C) a debit to Accounts Payable for $64,000, a credit to Cash for $1280, and a credit to Merchandise Inventory for $62,720

D) a debit to Merchandise Inventory for $1280, a debit to Accounts Payable for $64,000, and a credit to Cash for $65,280

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Answers (1)

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Bridget Leonard · Answer 1

A) a debit to Accounts Payable for $64,000, a credit to Merchandise Inventory for $1280, and a credit to Cash for $62,720

Explanation:

The journal entry to record the payment made within days is shown below:

Account payable A/c Dr $64,000

To Merchandise inventory Inventory A/c $1,280

To Cash A/c $62,720

(Being the amount due is paid)

The computation is shown below:

For Merchandise inventory

= $64,000 * 2%

= $1,280

For cash account

= $64,000 - $1,280

= $62,720