A Company Using the Perpetual Inventory System Purchased Inventory Worth

question 96

Multiple Choice

A company using the perpetual inventory system purchased inventory worth $540,000 on account with credit terms of 2/15,n/45.Defective inventory of $40,000 was returned 2 days later,and the accounts were appropriately adjusted.If the company paid the invoice 20 days later,the journal entry to record the payment would be ________.

• A)$540,000 debit to Accounts Payable and $540,000 credit to Cash
• B)$500,000 debit to Accounts Payable and $500,000 credit to Cash
• C)$540,000 debit to Accounts Payable,$530,000 credit to Cash,and $10,000 credit to Merchandise Inventory
• D)$530,000 debit to Accounts Payable,$10,000 credit to Merchandise Inventory,and $500,000 credit to Cash

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Definitions:

Economic Relationships

Connections or associations between economic variables that show how changes in one can affect changes in another.

Post Hoc

Short for "post hoc ergo propter hoc," a logical fallacy implying that because one event follows another, the first event was the cause of the second.

Ergo Propter Hoc

A logical fallacy meaning "therefore, because of this," where a cause-and-effect relationship is incorrectly identified based on sequence alone.

Cause And Effect

The relationship between events or things, where one is the result of the other or others.