A Company Using the Perpetual Inventory System Purchased Inventory Worth

question 119

Multiple Choice

A company using the perpetual inventory system purchased inventory worth $500,000 on account with terms of credit being 3/15, n/45. Defective inventory of $50,000 was returned 2 days later and the accounts were appropriately adjusted. If the company paid the invoice 25 days later, the journal entry to record the payment would be:

• A)$500,000 debit to Accounts Payable and $500,000 credit to Cash.
• B)$450,000 debit to Accounts Payable, $450,000 credit to Cash.
• C)$500,000 debit to Accounts Payable ,$486,500 credit to Cash and $13,500 credit to Inventory.
• D)$486,500 debit to Accounts Payable, $13,500 credit to Inventory and $450,000 credit to Cash.

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Definitions:

Conglomerate Merger

Merger between two companies in unrelated industries.

Unrelated Industries

Different sectors or types of business activities that have no direct connection or influence on one another.

Regulation

The implementation of laws and rules by governments to control or manage certain activities or industries.

1980s

A decade characterized by economic change, technological advancement, and profound shifts in world politics, spanning from 1980 to 1989.