Answer:
The correct answer is B
Step-by-step explanation:
The journal entry to the record the goods purchase on December 7 as:
Inventory A/c...................................................Dr $1,000
Accounts Payable A/c....................................Cr $1,000
The journal entry to record on December 16, when payment made is as:
Accounts Payable A/c..............................Dr $ 1,000
Cash A/c..............................................Cr $ 980
Merchandise inventory A/c..............Cr $ 20
As payment is made within the period of discount, so the person will get discount of 2% on amount.
Working Note:
Discount Amount = Goods amount × Discount percentage
= $1,000 × 2%
= $20
Cash Amount = Goods amount - Discount amount
= $1,000 - $20
= $980