A Company That Uses the Perpetual Inventory System Purchased Merchandise $\begin{array}{|c|c|c|}\hline \text { Merchandise Inventory } & 4,300 & \\\hline \text { Accounts Payable } & & 4,300 \\\hline\end{array}$

question 174

Multiple Choice

A company that uses the perpetual inventory system purchased merchandise inventory at a cost of $4,300 with credit terms 3/15,net 45.If the company elects to pay within the discount period,what would be the appropriate journal entry to record the payment?

• A) \(\begin{array}{|c|c|c|}
• \hline \text { Merchandise Inventory } & 4,300 & \\
• \hline \text { Accounts Payable } & & 4,300 \\
• \hline
• \end{array}\)
• B) \[\begin{array} { | l | c | c | }
• \hline \text { Accounts Payable } & 4,300 & \\
• \hline \text { Merchandise Inventory } & & 4,300 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | l | c | c | }
• \hline \text { Purchase Discount } & 4,171 & \\
• \hline \text { Accounts Payable } & & 4,171 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | c | c | c | }
• \hline \text { Accounts Payable } & 4,171 & \\
• \hline \text { Cash } & & 4,171 \\
• \hline
• \end{array}\]
• E) \[\begin{array} { | l | r | r | }
• \hline \text { Accounts Payable } & 4,300 & \\
• \hline \text { Merchandise Inventory } & & 129 \\
• \hline \text { Cash } & & 4,171 \\
• \hline
• \end{array}\]

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Definitions:

Ending Inventory

The final value of goods available for sale at the end of an accounting period, calculated before the next period's beginning inventory.

Cost of Goods Sold

An expense reflecting the direct costs attributable to the production of the goods sold by a company.

LIFO Inventory Method

An accounting method that assumes the last items of inventory purchased are the first to be used or sold, affecting the cost of goods sold and inventory valuation.

FIFO Inventory Method

An accounting method for valuing inventory that assumes the first items purchased are the first ones sold.