Question

33) A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $200 worth of merchandise. On July 28, it paid the full amount due. Assuming the company uses a perpetual inventory system, and records purchases using the gross method, the correct journal entry to record the payment on July 28 is:

Answer 1

Answer: Debit Account Payable $1600, Credit Cash $1600

Explanation:

If the perpetual inventory system, and purchases are recorded through the use of a gross method, the correct journal entry to record the payment on July 28 will be to Debit Account Payable $1600, and then Credit Cash $1600.

In this case, we should note that we don't need any adjustment for discount. This is because the payment made was on the 28th of July.