A Company That Uses the Perpetual Inventory System Purchased Inventory

question 27

Multiple Choice

A company that uses the perpetual inventory system purchased inventory for $1,000,000 on account with terms of 4/7, n/20. Which of the following correctly records the payment made 15 days after the date of invoice?

• A) \(\begin{array}{l}
• \begin{array}{|c|c|c|}
• \hline\text { Cash }&1,000,000\\
• \hline \text { Accounts Payable } && 1,000,000\\
• \hline
• \end{array}
• \end{array}\)
• B) \[\begin{array} { | c | r | r | }
• \hline \text { Accounts Payable } & 1,000,000 & \\
• \hline \text { Merchandise Inventory } & & 1,000,000 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | c | r | r | }
• \hline \text { Accounts Payable } & 1,000,000 & \\
• \hline \text { Cash } & & 1,000,000 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | c | r | r | }
• \hline \text { Accounts Payable } & 1,000,000 & \\
• \hline \text { Merchandise Inventory } & & 100,000 \\
• \hline \text { Cash } & & 900,000 \\
• \hline
• \end{array}\]

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Definitions:

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The authority given to a state to govern or legislate over certain matters within its territorial boundaries.

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