A Company That Uses the Gross Method of Recording Purchases

question 258

Multiple Choice

A company that uses the gross method of recording purchases and a perpetual inventory system purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $200 worth of merchandise. On July 28, it paid the full amount due. The correct journal entry to record the purchase on July 5 is:

• A)Debit Merchandise Inventory $1,600; credit Cash $1,600.
• B)Debit Merchandise Inventory $1,800; credit Accounts Payable $1,800.
• C)Debit Merchandise Inventory $1,800; credit Sales Returns $200; credit Cash $1,600.
• D)Debit Accounts Payable $1,800; credit Merchandise Inventory $1,800.
• E)Debit Accounts Payable $1,800; credit Purchase Returns $200; credit Merchandise Inventory $1,600.

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The degree to which information is generalized or removed from the specifics of individual examples.

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Universal in extent; embracing everything or all important points.

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Individuals who share one or both parents in common, typically referred to as brothers or sisters.