We appreciate your visit to VeCo which uses the perpetual method records merchandise purchases at gross On October 3 VeCo buys 42 000 of merchandise on account Terms are 2. This page offers clear insights and highlights the essential aspects of the topic. Our goal is to provide a helpful and engaging learning experience. Explore the content and find the answers you need!
Answer :
The entry which VeCo record on October 11 would be:
- Accounts Payable 32,000
- Cash 31,360
- Purchase Discounts 640
So, the correct answer is B.
VeCo uses the perpetual method and records merchandise purchases at gross.
On October 3, VeCo purchases $42,000 of merchandise on account with terms 2/10, n/40. On October 9, VeCo returns goods worth $10,000, reducing the payable amount to $32,000.
On October 11, VeCo pays $31,360, taking advantage of the 2% discount for early payment within 10 days.
The correct journal entry on October 11 is: Accounts Payable 32,000 Cash 31,360 Purchase Discounts 640
This journal entry is indicates that VeCo's accounts payable are reduced by $32,000, cash is decreased by $31,360, and a purchase discount of $640 is recorded for the early payment.
Hence, the answer of the question is B.
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