Can you please answer this question. Thank you. Inventory Purchases: $10,500 Inv
ID: 2331082 • Letter: C
Question
Can you please answer this question. Thank you.
Inventory Purchases: $10,500 Inventory Purchase Date: March 1, 2018 Payment Terms: 2/10/n/30 Payment Date: March 12, 2018 (a) Write the journal entry for March 12 payment on Inventory you had previously bought Use this format: Debit Account Name on March 1? Credit Account Name Note: Your entry may have more than one debit and or credit (b) After you made the payment, what is the balance in the Inventory account in your books? (c) After you made the payment, what is the Accounts Payable Balance involving this scenario?Explanation / Answer
a) Term 2/10/n/30 means if company paid within 10 days, they will get 2% cash discount.
but in given case it was paid after 10 days. so they will not get any cash discount. Journal entry will be:
b) After the payment inventory value will be same as before payment. it will be $10,500
c) $10,500 accounts payable balance reduced after the payment
Debit Accounts payable $ 10,500 Credit Cash $ 10,500