A Company Purchased Inventory for $2,000 from a Vendor on Account,FOB

question 246

Essay

A company purchased inventory for $2,000 from a vendor on account,FOB shipping point,with terms of 2/10,n/30.The company paid $100 cash for freight in.Prepare the journal entry to record payment of the invoice,within 10 days of the invoice date,by the purchaser.(Assume a perpetual inventory system.)Omit explanation.

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Definitions:

Plant and Equipment

Physical assets used in the operation of a business, including machinery, buildings, and vehicles.

Current Ratio

A financial metric that measures a company's ability to cover its short-term obligations with its short-term assets, indicating liquidity.

Stockholders' Equity

The portion of a company's assets that belongs to its shareholders after liabilities have been subtracted.

Current Assets

Current assets are short-term, liquid assets that a company owns and are expected to be converted into cash, sold, or consumed within one year or within a business's operating cycle, whichever is longer.