On May 1,Santelle Company Purchased $700 of Inventory on Account

question 57

Multiple Choice

On May 1,Santelle Company purchased $700 of inventory on account with credit terms of 4/10,net 30.Santelle uses the perpetual inventory system.On May 2,the seller gave Santelle a $100 allowance due to a product defect.What journal entry did Santelle Company prepare on May 2?

• A)debit Accounts Payable for $100 and credit Purchase Returns and Allowances for $100
• B)debit Accounts Payable for $100 and credit Purchase Discounts for $100
• C)debit Cash for $100 and credit Accounts Payable for $100
• D)debit Accounts Payable for $100 and credit Inventory for $100

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Definitions:

Liquidating Partnership

The process of dissolving a partnership by selling off assets, paying liabilities, and distributing the remaining assets to the partners.

Final Settlement

The concluding financial transaction that resolves all outstanding obligations of a contract.

Profit and Loss Sharing

An agreement between business partners to distribute the profits and losses of a business in proportion to their ownership stakes or agreed-upon percentages.

Liquidation Expenses

Liquidation expenses are the costs associated with selling or disposing of a company's assets during the cessation of operations, often part of winding down a business.