Avery Supplies Uses a Periodic Inventory System B) C) D) $$\begin{array} { | c | r | r | } \hline \text { Accounts Payable } & 400 & \\\hline \text { Cash } & & 400 \\\hline\end{array}$$

question 54

Multiple Choice

Avery Supplies uses a periodic inventory system. Avery purchased $10,000 of inventory on account. The terms were 3/10, n/30. The purchase was made on February 1. On February 2, Avery returned $400 of damaged goods to the supplier and was granted an allowance. How should Avery properly record the allowance?

• A) \[\begin{array} { | r | r | r | }
• \hline \text { Accounts Payable } & 400 & \\
• \hline \text { Purchase Returns and Allowances } & & 400 \\
• \hline
• \end{array}\]
• B) \(\begin{array}{|l|l|cc|}
• \hline \text {Accounts Payable \quad\quad\quad\quad } & \text { \quad\quad9,600 } & \text { }\\
• \hline \text { Purchase Discounts } & \text {\quad\quad\quad\quad400 } & \text { }\\
• \hline \text { Purchases } & \text { } & \text { \quad\quad\quad10,000 }\\
• \hline
• \end{array}\)
• C) \[\begin{array} { | c | r | r | }
• \hline \text { Accounts Payable } & 10,000 & \\
• \hline \text { Cash } & & 9,600 \\
• \hline \text { Purchase Returns and Allowances } & & 400 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | c | r | r | }
• \hline \text { Accounts Payable } & 400 & \\
• \hline \text { Cash } & & 400 \\
• \hline
• \end{array}\]

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Definitions:

Decision Processes

The cognitive and logical steps involved in making choices among alternatives to achieve a goal.

Rationality

The quality of being based on or in accordance with reason or logic.

Confusion

The state of being bewildered or unclear in one’s mind about something.

Subordinate Wants

The desires or needs of lower-ranking individuals in an organizational or hierarchical structure.