Assume That a Company Records Purchases Net of Discount

Multiple Choice

Assume that a company records purchases net of discount. If the company bought merchandise valued at $10,000 on credit terms 3/15, n/30, the entry to record a payment for half of the purchase within the discount period would include a debit to:

A) Accounts payable for $4,850 and a credit to cash for $4,850
B) Accounts payable for $5,000 and a credit to cash for $5,000
C) Accounts payable for $4,850 and to interest expense for $150, and a credit to cash for $5,000
D) Accounts payable for $5,000 and to interest revenue for $150 and to cash for $4,850