Question

Purchases were made on account on August 5th in the amount of $100,000 with terms of 1/10, n/30. The bill was paid on August 14th. In a perpetual inventory system the journal entry to record the payment would include A : a credit to Accounts Receivable for $100,000. B : a credit to Inventory for $1,000. C : a debit to Accounts Payable for $99,000. D : a credit to Cash for $100,000.

Answer 1

Answer:

The correct answer is B

Explanation:

The perpetual inventory system is the system or the method for the management of inventory, which records the real time transactions of the sold as well as received stock by using the technology, which is usually considered to more efficient.

Under this system, the entry to be recorded for the payment is as:

Accounts Payable A/c........................Dr $100,000

       Inventory A/c.......................................Cr   $100,000

So, the account of accounts payable will be debited against the inventory account.