Business Office Supplies, Inc. uses the periodic inventory system. On February 1, the corporation purchased inventory on account for $20,000. The terms of invoice were 4/10, n/30. The amount due was paid on February 9. Which of the following journal entries correctly records the payment in the books of Business Office Supplies? Select one: A. Accounts Payable 20,000 Purchases 20,000 B. Accounts Payable 20,000 Purchase Discounts 800 Cash 19,200 C. Accounts Payable 20,000 Cash 20,000 D. Accounts Payable 20,000 Merchandise Inventory 800 Cash 19,200

Question

Business

Ayaan Randolph

29 July, 11:39

Business Office Supplies, Inc. uses the periodic inventory system. On February 1, the corporation purchased inventory on account for $20,000. The terms of invoice were 4/10, n/30. The amount due was paid on February 9. Which of the following journal entries correctly records the payment in the books of Business Office Supplies? Select one: A. Accounts Payable 20,000 Purchases 20,000 B. Accounts Payable 20,000 Purchase Discounts 800 Cash 19,200 C. Accounts Payable 20,000 Cash 20,000 D. Accounts Payable 20,000 Merchandise Inventory 800 Cash 19,200

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Answers (1)

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Jade Preston · Answer 1

B. Accounts Payable 20,000 Purchase Discounts 800 Cash 19,200

Explanation:

The journal entry is shown below:

Account payable Dr $20,000

To Purchase discount $800 ($20,000 * 4%)

To Cash $19,200

(Being the payment is recorded)

While recording this transaction we debited the account payable as it reduced the current liabilities while at the same time it also reduced the asset so we credited it and along with it the purchase account is also credited