Assume That a Company Records Purchases Net of Discount

question 142

Multiple Choice

Assume that a company records purchases net of discount. If the company bought merchandise valued at $10,000 on credit terms 3/15, n/30, the entry to record a payment for half of the purchase within the discount period would include a debit to:

• A) Accounts payable for $4,850 and a credit to cash for $4,850
• B) Accounts payable for $5,000 and a credit to cash for $5,000
• C) Accounts payable for $4,850 and to interest expense for $150, and a credit to cash for $5,000
• D) Accounts payable for $5,000 and to interest revenue for $150 and to cash for $4,850

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Definitions:

Divorce

The legal dissolution of a marriage by a court or other competent body.

Easement

A right to cross or otherwise use someone else's land for a specified purpose.

Permission

Consent or authorization given by one party to another to do something that is not allowed without such consent.

Owner

An individual or entity that has legal title to, or vested interest in, property or assets.