This transaction will affect the financial statement by: Increase inventory and increase accounts payable.
<h3>Financial statement:</h3>
Assuming the company purchased merchandise inventory on account of the amount of $8,500 using the perpetual inventory method the effect of the transaction on the financial statement is: Inventory will increase by $8,500 and accounts payable will increase by $8,500.
The company inventory will increase due to the purchase they made while the company accounts payable will increase because the company purchased the goods on credit which simply means that they are yet to pay their suppliers.
Inconclusion this transaction will affect the financial statement by: Increase inventory and increase accounts payable.
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Answer:
B. Accounts Payable 20,000 Purchase Discounts 800 Cash 19,200
Explanation:
The journal entry is shown below:
Account payable Dr $20,000
To Purchase discount $800 ($20,000 × 4%)
To Cash $19,200
(Being the payment is recorded)
While recording this transaction we debited the account payable as it reduced the current liabilities while at the same time it also reduced the asset so we credited it and along with it the purchase account is also credited