Question

A company that uses the perpetual inventory system purchases inventory for $61,000 on account, with terms of 3/10,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 $61,000, a credit to Cash for $59,170, and a debit to Merchandise Inventory for $1,830.
B. A debit to Accounts Payable for $61.000, a credit to Merchandise Inventory for $1.830, and a credit to Cash for $59,170.
C. A debit to Merchandise Inventory for $1,830, a debit to Accounts Payable for $61.000, and a credit to Cash for $62,830.
D. A debit to Accounts Payable for $59,170, a debit to Merchandise Inventory for $1,830, and a credit to Cash for $61,000.

Answer 1

The journal entry to record the payment made within 10 days for a company using the perpetual inventory system is a debit to Accounts Payable for $61,000, a credit to Cash for $59,170, and a debit to Merchandise Inventory for $1,830. Option A is correct.

Step-by-step explanation:

The journal entry to record the payment made within 10 days for a company using the perpetual inventory system is option A: A debit to Accounts Payable for $61,000, a credit to Cash for $59,170, and a debit to Merchandise Inventory for $1,830.

Here's the step-by-step explanation:

1. Debit Accounts Payable for the full amount of the inventory purchased, which is $61,000.
2. Credit Cash for the amount paid within 10 days, which is calculated based on the terms 3/10,n/30. In this case, the discount is 3% of $61,000, which is $1,830. So, the cash paid is $61,000 - $1,830 = $59,170.
3. Debit Merchandise Inventory for the discount amount, $1,830, because it represents a reduction in the cost of inventory.