Question

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

Answer 1

Answer:

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