Question

Polk Company uses a perpetual inventory system and had the following transactions during November:

November 6—Purchased $8,700 of inventory on account, terms 2/10, n/30.
November 8—Returned $1,200 of defective units and received full credit.
November 15—Paid the amount due.

What journal entry will be recorded by Polk Company on November 15?
A) Debit Accounts Payable and credit Cash for $7,350
B) Debit Accounts Payable for $7,500, credit Purchase Discount for $150, and credit Cash for $7,350
C) Debit Accounts Payable for $7,500, credit Inventory for $150, and credit Cash for $7,350
D) Debit Accounts Payable for $7,350, credit Inventory for $150, and credit Cash for $7,200

Answer 1

The correct journal entry that Polk Company will record on November 15 is: Debit Accounts Payable for $7,500, credit Inventory for $150, and credit Cash for $7,350

Step-by-step explanation:

The correct journal entry that Polk Company will record on November 15 is:

C) Debit Accounts Payable for $7,500, credit Inventory for $150, and credit Cash for $7,350

In this transaction, Polk Company paid the amount due to its supplier for the purchase made on November 6. The Accounts Payable account is debited to reduce the liability owed to the supplier. The Inventory account is credited to reflect the decrease in the inventory balance. Finally, the Cash account is credited to show the outflow of cash to pay for the purchase.