Yankee Company Uses the Net Method of Recording Purchase Discounts

question 61

Multiple Choice

Yankee Company uses the net method of recording purchase discounts on inventory and the perpetual inventory system. Yankee Company records a payment within the discount period. Which journal entry is prepared?

• A) Debit Accounts Payable and credit Cash for the gross amount of the purchase.
• B) Debit Accounts Payable and credit Cash for the net amount of the purchase.
• C) Debit Accounts Payable, credit Cash and credit Inventory.
• D) Debit Accounts Payable, credit Cash and credit Interest Revenue.

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Definitions:

Diastole

The phase of the cardiac cycle during which the heart relaxes and fills with blood.

Heart Cycle

The sequence of events that occur in the heart during one heartbeat, encompassing both the contraction (systole) and relaxation (diastole) phases.

Relaxation

The act or process of becoming less tense, stressed, or anxious, often involving techniques or activities that promote this state.

Oximetry

A procedure for measuring the oxygen saturation of the blood.