On July 22,a Company Purchased Merchandise Inventory at a Cost

question 24

Multiple Choice

On July 22,a company purchased merchandise inventory at a cost of $5,250 with credit terms 2/10,net 30.If the company pays for the purchase on August 7,what would be the appropriate journal entry?

• A)
• \[\begin{array} { | c | c | c | }
• \hline \text { Merchandise Inventory } & 5,250 & \\
• \hline \text { Accounts Payable } & & 5,250 \\
• \hline
• \end{array}\]
• B)
• \(\begin{array}{|c|c|c|}
• \hline \text { Accounts Payable } & 5,250 & \\
• \hline \text { Merchandise Inventory } & & 5,250 \\
• \hline
• \end{array}\)
• C)
• \(\begin{array}{|l|l|l|}
• \hline \text { Accounts Payable } & 5,250 & \\
• \hline \text { Cash } & & 5,250 \\
• \hline
• \end{array}\)
• D)
• \[\begin{array} { | c | c | c | }
• \hline \text { Accounts Payable } & 5,145 & \\
• \hline \text { Cash } & & 5,145 \\
• \hline
• \end{array}\]
• E)
• \[\begin{array} { | l | r | r | }
• \hline \text { Accounts Payable } & 5,250 & \\
• \hline \text { Merchandise Inventory } & & 105 \\
• \hline \text { Cash } & & 5,145 \\
• \hline
• \end{array}\]

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Definitions:

Fisher Effect

A theory proposing that the real interest rate is equal to the nominal interest rate minus the expected inflation rate, emphasizing the relationship between inflation and real and nominal interest rates.

Nominal

Referring to amounts or prices that have not been adjusted for inflation, representing face value rather than real value.

Unexpected Decrease

A sudden and unforeseeable reduction in value, amount, or number, often affecting financial markets or specific assets.

Market Interest Rates

The prevailing rates at which borrowers and lenders execute lending transactions in the market. It reflects the cost of borrowing money in the financial markets.