Final answer:
The correct journal entry recorded by Flynn Company on November 6 is: `Debit Accounts Payable for $5,000, credit Inventory for $100, and credit Cash for $4,900.`
The answer is option ⇒B
Step-by-step explanation:
When Flynn Company purchased $5,800 of inventory on account on November 6, the Accounts Payable account is debited for the full amount of $5,800 since it represents the amount owed to the supplier. However, the company is eligible for a purchase discount of 2% if paid within 10 days, as stated in the terms.
To calculate the purchase discount, we multiply the total purchase amount ($5,800) by the discount rate (2%):
$5,800 * 2% = $116
Therefore, the discount amount is $116, which will be credited to the Purchase Discount account.
Next, we need to determine the cash payment. The cash payment is calculated by subtracting the discount amount from the total purchase amount:
$5,800 - $116 = $4,684
Finally, the Inventory account is credited for the remaining amount after accounting for the discount:
$5,800 - $116 = $4,684
Therefore, the journal entry recorded by Flynn Company on November 6 is:
- Debit: Accounts Payable for $5,000
- Credit: Inventory for $100
- Credit: Cash for $4,900
The answer is option ⇒B
Your question is incomplete, but most probably the full question was:
Flynn Company uses a perpetual inventory system and had the following transactions during November . November 6 Purchased $5,800 of inventory on account, terms 2/10, n/30. November 8- Returned $800 of defective units and received full credit. . November 15 Paid the amount due. Use the information above to answer the following question.
What journal entry will be recorded by Flynn Company on November 6?
- A. Debit Accounts Payable for $4900, credit Inventory for $100, and credit Cash for $4.800
- B. Debit Accounts Payable for $5,000, credit inventory for $100 and credit Cash for $4,900
- C. Debit Accounts Payable and credit Cash for $4,900
- D. Debit Accounts Payable for $5,000, credits Purchase Discount for $100.and credit Cash for $4,900
Options:
A. Option A
B. Option B
C. Option C
D. Option D