A Company That Uses the Gross Method of Recording Purchases

Multiple Choice

A company that uses the gross method of recording purchases and a perpetual inventory system made a purchase of $400 with terms of 2/10, n/30. The entry to record the purchase would be:

A) Debit Merchandise Inventory $392; credit Accounts Payable $392.
B) Debit Merchandise Inventory $400; credit Accounts Payable $400.
C) Debit Merchandise Inventory $392; credit Cash for $392.
D) Debit Merchandise Inventory $392; debit Discounts Lost $8; credit Accounts Payable $400.
E) Debit Accounts Payable $400; credit Discounts Lost $8; credit Cash $392.