4) Farthington Soccer Supplies purchases merchandise from a supplier on credit,

Question

4) Farthington Soccer Supplies purchases merchandise from a supplier on credit, terms 2/10, n/30 for $15,300. Assume the company uses a perpetual inventory system, and records purchases using the gross method. When recording the purchase transaction in its purchases journal, Farthington would enter: 4) A) S15,300 in the Inventory Dr. column, $14,994 in the Accounts Payable Cr. column, and $306 in the Purchase Discount Cr.column B) $15,300 in the Accounts Payable Cr. column and $15,300 in the Inventory Dr. column. C) S15,300 in the Accounts Payable Cr. column and S15,300 in the Supplies Dr. column. D) S15,300 in the Other Accounts Dr. column and $15,000 in the Inventory Cr. column. E) $14,994 in the Inventory Dr. column and $14,994 in the Accounts Payable Cr.column.

Explanation / Answer

Answer:

B) $15,300 in the Accounts Payable Cr. column and $15,300 in the Inventory Dr. column.

The journal entry

Account title and explanation

Debit

Credit

Inventory

15,300

To Accounts payable

15,300

Account title and explanation

Debit

Credit

Inventory

15,300

To Accounts payable

15,300

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