Merchandise with an Invoice Price of $2,000 Was Purchased on February

Multiple Choice

Merchandise with an invoice price of $2,000 was purchased on February 3, terms 2/15, n/60. The company uses the gross method to record purchases and a perpetual inventory system. The entry to record a cash payment of this purchase obligation on February 17 is:

A) Debit Accounts Payable $1,960; credit Cash $1,960.
B) Debit Accounts Payable $2,000; credit Cash $2,000.
C) Debit Accounts Payable $1,960; debit Discounts Lost $40; credit Cash $2,000.
D) Debit Accounts Payable $2,000; credit Merchandise Inventory $40; credit Cash $1,960.
E) Debit Accounts Payable $2,000; credit Discounts Lost $40; credit Cash $1,960.