A Company That Uses the Perpetual Inventory Method Purchases Inventory

question 60

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 within 10 days,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:

Effective Recycling

The process of collecting and processing materials that would otherwise be thrown away as trash and turning them into new products in a manner that preserves the environment.

Growing Season

The period of the year when the weather and temperature allow for plant growth.

Temperate Deciduous Forest

A forest biome that occurs in temperate areas where annual precipitation ranges from about 75 cm to 125 cm.

Tropical Rain Forest

A dense, warm, biodiverse forest biome located near the equator with high annual rainfall.