Question

Your firm, which uses the perpetual method, purchases $10,000 of inventory, 2/10, n/30 you debit inventory for $9,800 and credit accounts payable for $9,800. if the merchandise is paid for within the discount period, you will:

a. debit to accounts payable for $9,800.
b. debit to purchase discounts lost for $200.
c. credit to purchase discounts lost for $200.
d. credit to inventory for $200.

Answer 1

The correct answer is to debit Accounts Payable for $9,800 when paying the invoice within the discount period using the perpetual inventory method. This aligns with the initial credit made when the inventory was recorded at the discounted price.

Correct answer is option a. debit to Accounts Payable for $9,800.

Step-by-step explanation:

The student's question pertains to a scenario where a firm is using the perpetual inventory method and applies a purchase discount to an inventory acquisition. The firm initially records an inventory purchase of $10,000 with a discount term of 2/10, n/30 by debiting inventory and crediting accounts payable for $9,800, considering the discount is taken.

If the merchandise is paid for within the discount period, the correct journal entry to record the payment would be to debit Accounts Payable for $9,800, representing the actual amount payable after the discount, and to credit cash for the same amount. If your goal is to complete Table 9.2 or Table 10.2 with this information, you would update the merchandise balance and current account balance accordingly.

Therefore, the correct option from the ones provided is: a. debit to Accounts Payable for $9,800.