A Company Records Purchases Using the Net Method

question 17

Multiple Choice

A company records purchases using the net method.On February 1,they purchased merchandise inventory on account for $7,300 with terms of 1/10,n/30.The February 1 journal entry to record this transaction would include a:

• A)Debit to Merchandise Inventory of $7,300.
• B)Debit to Merchandise Inventory of $7,227.
• C)Debit to Merchandise Inventory of $73.
• D)Credit to Merchandise Inventory of $73.
• E)Credit to Accounts Payable of $7,300.

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Definitions:

Title

Title refers to the legal right to own or possess something, such as real estate or an automobile, proving ownership through documents or deeds.

Debit Side

The left side of an accounting ledger where debits are recorded, typically increasing assets or decreasing liabilities and equity.

Credit Side

The side of an accounting ledger where increases in liabilities, income, and equity are recorded, as well as decreases in assets.

Debit Balance

An accounting entry that shows a company owes money or has an asset; it appears on the left side of a ledger.