Question

Elkins Corporation uses the perpetual inventory method. On March 1, it purchased $20,000 of inventory, terms 2/10, n/30. On March 3, Elkins returned goods that cost $2,000.

On March 9, Elkins paid the supplier. On March 9, Elkins should credit :
a. purchase discounts for $400.
b. inventory for $400.
c. purchase discounts for $360.
d. inventory for $360.

Answer 1

d. inventory for $360.

Step-by-step explanation:

The journal entry is shown below:

Account payable A/c Dr $18,000

To Cash A/c $17,640

To Inventory A/c $360

(Being the payment is recorded)

The computation of the account payable

= Purchased goods - returned goods

= $20,000 - $2,000

= $18,000

And, the discount would be

= Accounts payable × percentage given

= $18,000 × 2%

= $360

The remaining amount would be credited to the cash account.