Business Office Supplies Company Uses the Periodic Inventory System B) $$\begin{array} { | l | r | r | } \hline \text { Accounts Payable } & 20,000 & \\\hline \text { Cash } & & 20,000 \\\hline\end{array}$$

question 199

Multiple Choice

Business Office Supplies Company uses the periodic inventory system.On February 1,the sole proprietorship purchased inventory on account for $20,000.The terms of invoice were 5/10,n/30.The amount due was paid on February 9.Which of the following journal entries correctly records the payment in the books of Business Office Supplies?

• A) \[\begin{array} { | l | r | r | }
• \hline \text { Accounts Payable } & 20,000 & \\
• \hline \text { Purchase Discounts } & & 1,000 \\
• \hline \text { Cash } & & 19,000 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | r | r | }
• \hline \text { Accounts Payable } & 20,000 & \\
• \hline \text { Cash } & & 20,000 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | c | r | r | }
• \hline \text { Accounts Payable } & 20,000 & \\
• \hline \text { Purchases } & & 20,000 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | r | r | }
• \hline \text { Accounts Payable } & 20,000 & \\
• \hline \text { Merchandise Inventory } & & 1,000 \\
• \hline \text { Cash } & & 19,000 \\
• \hline
• \end{array}\]

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Definitions:

Income Statement

A report detailing a firm's income, expenditures, and net income or loss for a certain time frame.

Operating Cycle

The time it takes for a company to purchase inventory, sell it to customers, and collect the cash from the sale.

Automobile Manufacturer

A company engaged in the designing, production, marketing, and selling of motor vehicles.

Earnings Per Share

A financial ratio indicating the portion of a company's profit allocated to each outstanding share of common stock.