(Appendix) a Purchase Was Made for $200 on Account with Credit

question 33

Multiple Choice

(Appendix) A purchase was made for $200 on account with credit terms of 2/10, n/30. The purchase was recorded using the net-price method. If payment is made 25 days later, the entry to record the payment will be to

• A) debit Accounts Payable for $200 and credit Cash for $200.
• B) debit Accounts Payable for $204, credit Purchases Discounts Lost for $4, and credit Cash for $200.
• C) debit Accounts Payable for $196, debit Purchases Discounts Lost for $4, and credit Cash for $200.
• D) debit Purchases for $196, debit Purchases Discounts Lost for $4, and credit Cash for $200.

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Definitions:

Model Laws

Statutes recommended by organizations, such as the Uniform Law Commission, for adoption by all jurisdictions to encourage consistent legal standards across states or countries.

Commercial Transactions

Activities or deals involving the exchange of goods or services between businesses or individuals for the purpose of commerce.

Promissory Estoppel

Promissory estoppel is a legal principle that prevents a party from withdrawing a promise made to another when the latter has reasonably relied on that promise to their detriment.

Doctrine

A set of beliefs, principles, or position, often held by an organization or a particular field of study.