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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Definitions:

Positive Reinforcement

The process of encouraging or increasing a behavior by presenting a favorable outcome or reward upon the occurrence of the behavior.

Inventory Of Rewards

A catalog or list of rewards and incentives available within an organization, intended to motivate and acknowledge employee contributions.

Contingent Reinforcement

The provision of rewards or consequences based on the occurrence of a specific behavior, used as a strategy to increase or decrease that behavior.

Ethical Issues

Matters or situations that require a choice between right and wrong actions, often guided by moral principles.