A Company That Uses the Perpetual Inventory Method Purchases Inventory

question 52

Multiple Choice

A company that uses the perpetual inventory method purchases inventory for $2,000 from a vendor on account,FOB shipping point,with terms of 2/10,n/30.The company paid the shipper $100 cash for freight in.
-Which of the following entries would be made to record payment to the vendor if the payment is made within 10 days?

• A) $1,960 debit to Accounts payable and a $1,960 credit to Cash
• B) $2,000 debit to Accounts payable, a $100 debit to Inventory and a $1,960 credit to Cash
• C) $2,000 debit to Accounts payable, a $40 credit to Inventory and a $1,960 credit to Cash
• D) $1,960 debit to Accounts payable, a $40 debit to Inventory and a $2,000 credit to Cash

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Definitions:

Independent Events

Two or more events in probability that have no effect on the likelihood of one another occurring.

Babies Born

A demographic measure referring to the number of live births occurring during a specific time period.

Probability

The measure of the likelihood that an event will occur, quantified as a number between 0 and 1, where 0 indicates impossibility and 1 indicates certainty.

Proportion

An element or quantity evaluated in its connection to the total sum.