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A Company Uses the Perpetual Inventory System and Recorded the Following

Question 4

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A company uses the perpetual inventory system and recorded the following entry:  Merchandise Inventory 2,500 Accounts Payable 2,500\begin{array}{|c|c|c|}\hline \text { Merchandise Inventory } & 2,500 & \\\hline \text { Accounts Payable } & & 2,500 \\\hline\end{array} This entry reflects a:


A) Purchase of merchandise on credit.
B) Return of merchandise.
C) Sale of merchandise on credit.
D) Payment of the account payable less a 2% cash discount taken.
E) Payment of the account payable less a 1% cash discount taken.

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