A Firm That Uses the Perpetual Inventory Method Purchases Inventory

question 57

Multiple Choice

A firm that uses the perpetual inventory method purchases inventory of $1 000 on credit, including GST, with terms of 2/10, n/30. Which of the following entries would be made to record the payment if it is made 20 days later?

• A)$1 000 debit to Accounts payable and a $1 000 credit to Cash
• B)$1 000 debit to Accounts payable, a $18.18 credit to Inventory, a $1.82 credit to GST Clearing and a $980 credit to Cash
• C)$980 debit to Accounts payable, a $20 debit to Inventory and a $1 000 credit to Cash
• D)$20 debit to Inventory, a $1 000 debit to Accounts payable and a $1 020 credit to Cash

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