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A company uses perpetual inventory system and recorded the following entry: Debit Credit Accounts Payable 2500...

A company uses perpetual inventory system and recorded the following entry: Debit Credit Accounts Payable 2500 Cash 2450 Merchandise Inventory 50 This entry reflects a Select one: a. Return. b. Payment of the accounts payable and recognition of a cash discount taken. c. Sale. d. Purchase.

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  • Correct Answer = Option [B] The entry reflects ‘payment of the accounts payable, and recognition of a cash discount’.

Accounts payable is paid as the account is debited by $ 2500.
Cash is credited by $ 2450 which means cash is being paid.
Merchandise inventory is credited by $ 50, which is the purchase discount availed.

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