A Company That Uses the Perpetual Inventory Method Purchases Inventory

question 93

Multiple Choice

A company that uses the perpetual inventory method purchases inventory of $1,000 on account with terms of 2/10,n/30.Defective inventory of $200 is returned 2 days later and the accounts are appropriately adjusted.If the company paid the vendor 25 days later,which of the following entries would be made to record the payment?

• A) $800 debit to Accounts payable and an $800 credit to Cash
• B) $784 debit to Accounts payable, a $16 debit to Inventory and an $800 credit to Cash
• C) $16 debit to Inventory, an $800 debit to Accounts payable and an $816 credit to Cash
• D) $800 debit to Accounts payable, a $16 credit to Inventory and a $784 credit to Cash

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Definitions:

Corrective Taxes

Corrective taxes are levied to correct the effects of negative externalities and align consumers' private costs with the overall societal costs.

Deadweight Losses

Deadweight Losses represent the inefficiency in the market caused by, for example, taxes or monopolies, resulting in a loss of economic efficiency when the optimal quantity of goods or services is not produced.

Cleaner Technologies

Cleaner technologies encompass innovative tools, methods, and practices designed to minimize environmental impact, particularly through reduced pollution and resource consumption.

Private Solutions

Individual or business-driven approaches or measures taken to resolve issues without the need for government intervention.