Question

Purchases were made on account on August 5th in the amount of $100,000 with terms of 1/10, n/30. The bill was paid on August 14th. In a perpetual inventory system the journal entry to record the payment would include

A: a credit to Accounts Receivable for $100,000.
B: a debit to Accounts Payable for $99,000.
C: a credit to Cash for $100,000.
D: a credit to Inventory for $1,000.

Answer 1

In a perpetual inventory system the journal entry to record the payment would include

a credit to Inventory for $1,000

Step-by-step explanation:

One percent of the purchases ($100,000 x .01 = $1,000) represents a discount, which will result in a credit to the Inventory account .

Purchases_100000_5/aug

paid ____________14/aug

Terms 1/10 n/30

Purchases 100000

discount % 1%

Discount______1000

net payment 99000