Farthington Soccer Supplies purchases merchandise from a supplier on credit, ter

Question

Farthington Soccer Supplies purchases merchandise from a supplier on credit, terms 2/10, n/30 for $16,000. When recording the purchase transaction in its purchases journal, Farthington would enter?:

A. $16,000 in the Accounts Payable Cr. column and $16,000 in the Inventory Dr. column.

B. $16,000 in the Accounts Payable Cr. column and $16,000 in the Supplies Dr. column.

C. $16,000 in the Inventory Dr. column, $15,680 in the Accounts Payable Cr. column, and $320 in the Purchase Discount Cr. column.

D. $15,680 in the Inventory Dr. column and $15,680 in the Accounts Payable Cr. column.

E. $16,000 in the Other Accounts Dr. column and $16,000 in the Inventory Cr. column.

Explanation / Answer

Answer is A

Farthington would enter folloing entry

$16,000 in the Accounts Payable Cr. column and $16,000 in the Inventory Dr. column.

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