A Company That Uses the Net Method of Recording Purchases

question 248

Multiple Choice

A company that uses the net method of recording purchases and a perpetual inventory system purchased $1,800 of merchandise on July 5 with terms 2/10,n/30.On July 7,it returned $200 worth of merchandise.On July 28,it paid the full amount due.The correct journal entry to record the payment on July 28 is:

• A)Debit Merchandise Inventory $1,600; credit Cash $1,600.
• B)Debit Cash $1,600; credit Accounts Payable $1,600.
• C)Debit Accounts Payable $1,600; credit Merchandise Inventory $32; credit Cash $1,568.
• D)Debit Accounts Payable $1,800; credit Cash $1,800.
• E)Debit Accounts Payable $1,568; debit Discounts Lost $32; credit Cash $1,600.

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Definitions:

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