A Company That Uses the Perpetual Inventory System Purchased Inventory $$\begin{array} { | l | c | c | } \hline \text { Cash } & 1,080,000 & \\\hline \text { Accounts Payable } & & 1,080,000 \\\hline\end{array}$$

question 131

Multiple Choice

A company that uses the perpetual inventory system purchased inventory for $1,080,000 on account with terms of 4/7,n/20.Which of the following correctly records the payment made 15 days after the date of invoice?

• A) \[\begin{array} { | l | c | c | }
• \hline \text { Cash } & 1,080,000 & \\
• \hline \text { Accounts Payable } & & 1,080,000 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | c | c | c | }
• \hline \text { Accounts Payable } & 1,080,000 & \\
• \hline \text { Merchandise Inventory } & & 1,080,000 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | c | c | c | }
• \hline \text { Accounts Payable } & 1,080,000 & \\
• \hline \text { Cash } & & 1,080,000 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | r | r | }
• \hline \text { Accounts Payable } & 1,080,000 & \\
• \hline \text { Merchandise Inventory } & & 43,200 \\
• \hline \text { Cash } & & 1,036,800 \\
• \hline
• \end{array}\]

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Definitions:

Tax Rate

The proportion of financial income that is taxed from either a person or a corporate body.

Unlevered Rate

A financial metric that measures the return on investment without considering the impact of financial leverage.

Absolute Priority Rule

A principle in bankruptcy proceedings that senior creditors are paid in full before junior creditors and equity holders receive any payment.

Liquidation

Liquidation is the process of bringing a business to an end and distributing its assets to claimants, often occurring when a company is insolvent.