10) Company X recently purchased 50 oil barrels on account for $250,000 with cre

Question

10) Company X recently purchased 50 oil barrels on account for $250,000 with credit terms 2/10,n/30. They paid for the goods within the discount period. However, they realized that 10 of the barrels were defective, and sent them back to the supplier. Under the perpetual Inventory System, what would be the journal entry to record the initial purchase of oil barrels? a. Purchases 250,000 b. Inventory 250,000 c. Inventory i. Inventory i. Accounts Payable i. Accounts Payable 250,000 250,000 250,000 245,000 5,000 ii. Inventory d. Accounts Payable 250,000 i. Cash 250,000

Explanation / Answer

Under perpetual inventory system, a purchase is recorded by debiting inventory account and crediting accounts payable or cash.

So, answer will be: B.

Inventory $250,000

Accounts payable $250,000

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