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

---

Definitions:

Activity Cost Pool

A grouping of all the costs related to a particular activity in the process of costing in an activity-based costing system.

Meeting With Clients

A scheduled appointment or gathering between a business and its clients aimed at discussing issues, making decisions, or fostering relationships.

Designing Products

The process of creating a new product to meet customer needs or market demand, involving concept creation, design, and development.

Activity Cost Pool

A way to group all the costs related to a specific activity or process, used in activity-based costing.