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:

Income Redistribution

A policy or process, often implemented through taxation and government spending, aimed at reducing economic inequalities by distributing wealth from the richer segments of society to poorer ones.

Minimum Wage

The lowest legally permissible amount that workers can be paid by employers, determined by country or state.

Petite Bourgeoisie

A social class characterized by small business owners, tradespeople, and the self-employed, often considered part of the lower middle class.

Class Conflict

is the struggle between classes to resist and overcome the opposition of other classes.