A Company That Uses the Perpetual Inventory System Purchases Inventory

question 206

Multiple Choice

A company that uses the perpetual inventory system purchases inventory for $62,000 on account,with terms of 2/10,n/30.Which of the following is the journal entry to record the payment made within 10 days?

• A)a debit to Accounts Payable for $62,000,a credit to Cash for $1,240,and a credit to Merchandise Inventory for $60,760
• B)a debit to Accounts Payable for $62,000,a credit to Merchandise Inventory for $1,240,and a credit to Cash for $60,760
• C)a debit to Merchandise Inventory for $1,240,a debit to Accounts Payable for $62,000,and a credit to Cash for $63,240
• D)a debit to Accounts Payable for $60,760,a debit to Merchandise Inventory for $1,240,and a credit to Cash for $62,000

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Definitions:

Yield-To-Maturity

The total return anticipated on a bond if the bond is held until its maturity date, considering all interest payments and the principal repayment.

Zero-Coupon Bond

A debt security that doesn't pay periodic interest but is issued at a substantial discount to its face value, maturing at that face value.

Face Value

The nominal or dollar value printed on a bond, stock, or other financial instrument, representing the value at issuance and the value to be repaid at maturity.

Zero-Coupon Bond

A financial security that does not pay periodic interest but is sold at a discount from its face value, and the investor receives the face value at maturity.