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A company purchases inventory on Jan. 15th for $5000 with credit terms n/30 4/10. On Jan....

A company purchases inventory on Jan. 15th for $5000 with credit terms n/30 4/10. On Jan. 18th, they realized that $2000 of the inventory was damaged and returned it to the seller. The company paid on January 23rd. The journal entry to record this payment on January 23rd would include?

The answer is Credit Inventory 120. I am not sure why this is the answer.

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Answer #1

Journal entry

Date account and explanation Debit credit
Jan 23 Account payable (5000-2000) 3000
Cash (3000*96%) 2880
Inventory (3000*4%) 120
(To record amount paid)
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