Question

Acompany using the perpetua inventorytem purchased Inventory worn 530,000 on account with crederm of 215,045 Detective inventory of 50.000 was returned 2 days later, and the accounts were propriately adjusted the company pred the maio 20 diny pumalantry to record the payment will be O A $80,00debih to Accounts Payable and $550.000 credit to Clash O $50.000 P000 Merchandise vertory, 14000 rados OC 1450.000 Accounts Payable and 1450.000 credito Cash

Answer 1

The correct answer is

Option c - $450,000 DEBIT to Accounts Payable and $450,000 CREDIT to Cash

Workings

Inventory Purchased = $530,000

Defective Inventory Returned = $80,000

Accounts Payable due = 530000-80000 = $450,000

The company would have availed 2% discount if it had made the payment with 15 days (credit terms of 2/15). Since, the payment was made after the discount period at 20 days, no discount will be received. Hence, amount paid and accounts payable honored will be $450,000.

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