Question

Dunder Mifflin purchased paper costing $11,000. The purchase was made on account with terms of 2/15, n/45. The original purchase was recorded with a DEBIT to Inventory and a CREDIT to Accounts Payable for $11,000. – The account was paid in cash after 20 days. Which ONE of the following is included in the journal entry to record the payment of cash on account after 20 days?
                
CREDIT to Cash for $11,000
                
CREDIT to Accounts Payable for $10,780
                
DEBIT to Cash for $10,780
                
CREDIT to Accounts Payable for $11,000
                
DEBIT to Accounts Payable for $10,780
                
CREDIT to Inventory for $220

Answer 1

The terms of the purchase are 2/15 which means, if $11,000 is paid within 15 days from the date of purchase 2% discount will be given by the supplier to the Dunder Mifflin.

$11,000 is paid after 20 days and not within 15 days. 2% discount will not be given by the supplier.

Total $11,000 will be paid without any discount.

 CREDIT to Cash for $11,000