A Company Records Purchases Using the Net Method

question 92

Multiple Choice

A company records purchases using the net method. On February 1, they purchased merchandise inventory on account for $8,300 with terms of 1/10, n/30. The February 1 journal entry to record this transaction would include a:

• A) Debit to Merchandise Inventory of $8,300.
• B) Debit to Merchandise Inventory of $8,217.
• C) Debit to Merchandise Inventory of $83.
• D) Credit to Merchandise Inventory of $83.
• E) Credit to Accounts Payable of $8,300.

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Definitions:

Joint Venture

An association between two or more parties wherein the parties share profits and management responsibilities with respect to a specific project.

Community Fair

A public event organized within a community, often showcasing local arts, crafts, and culture, and providing entertainment and activities for the members of the community.

Management Rights

The prerogatives and authority granted to employers to operate and manage their business, including decisions about hiring, work assignments, processes, and disciplinary actions.

Double Taxation

The imposition of taxes on the same income, asset, or financial transaction at two different levels of government, such as both state and federal taxes on the same income.