Yankee Company Uses the Net Method of Recording Purchase Discounts

Multiple Choice

Yankee Company uses the net method of recording purchase discounts on inventory and the perpetual inventory system. Yankee Company records a payment within the discount period. Which journal entry is prepared?

A) Debit Accounts Payable and credit Cash for the gross amount of the purchase.
B) Debit Accounts Payable and credit Cash for the net amount of the purchase.
C) Debit Accounts Payable, credit Cash and credit Inventory.
D) Debit Accounts Payable, credit Cash and credit Interest Revenue.