A Company Purchased Inventory for $2,000 from a Vendor on Account

question 42

Multiple Choice

A company purchased inventory for $2,000 from a vendor on account, FOB shipping point, with terms of 2/10, n/30. The company paid $100 cash for freight in. The entry to record payment of invoice within 10 days by the purchaser would include: (Assume a perpetual inventory system)

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

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Definitions:

Poor Communication

The ineffective exchange of information, which can lead to misunderstandings, errors, and conflict in any context, including personal, professional, and legal settings.

Case Damage

A term that refers to the harm or losses suffered as a result of the actions or events at the center of a legal case, often quantified in financial terms for compensation.

Client Relationship

The professional and ongoing association between a service provider and their client, often governed by an agreement and characterized by trust and confidentiality.

Legal Professionals

Individuals professionally qualified to offer advice, conduct lawsuits, or represent clients in legal matters, such as lawyers and judges.