Dawn Company Uses a Perpetual Inventory System Made a Purchase $\begin{array}{lrr} \text {Accounts Payable } &7,000\\ \text { Cash } &&7,000\\\end{array}$

Short Answer

Dawn Company uses a perpetual inventory system made a purchase of merchandise on credit from Wagne Corporation on August 3 for $7000 terms 2/10 n/45. On August 10 Dawn makes the appropriate payment to Wagne. The entry on August 10 for Dawn Company is a.
$\begin{array}{lrr} \text {Accounts Payable } &7,000\\ \text { Cash } &&7,000\\\end{array}$

b.
$\begin{array}{lrr} \text { Accounts Payable } &6,860\\ \text { Cash } &&6,860\end{array}$

c.
$\begin{array}{lrr} \text {Accounts Payable } &7,000\\ \text { Purchase Returns and Allowances } &&140\\ \text {Cash } &&6,860\end{array}$

d.
$\begin{array}{lrr} \text { Accounts Payable} &7,000\\ \text { Inventory } &&140\\ \text { Cash} &&6,860\end{array}$