Question

Foote Company was granted a purchase discount of $200 on merchandise the company had purchased a few days ago. Foote uses the perpetual inventory system. Which of the following reflects the effects of this event on the financial statements? Asset = Liab. + Stk. Equity Rev. - Exp. = Net Inc. Stmt of Cash Flows A. NA (200) 200 200 NA NA 200 OA B. NA (200) 200 200 NA 200 NA C. (200) (200) NA NA NA NA (200) OA D. (200) (200) NA NA NA NA NA

Answer 1

Answer: D. (200) (200) NA NA NA NA NA

Step-by-step explanation:

Discount on merchandise decreases the value of Assets (merchandise) and also decreases Liability (Trade Payable) if the merchandise was purchased on credit