A Company That Uses the Gross Method of Accounting for Purchases

Multiple Choice

A company that uses the gross method of accounting for purchases and a perpetual inventory system made a February 1 purchase of merchandise inventory on account for $7,300 with terms of 1/10, n/30. The February 1 journal entry to record this transaction would include a:

A) Debit to Merchandise Inventory of $7,300.
B) Debit to Merchandise Inventory of $7,227.
C) Credit to Cash of $7,300.
D) Credit to Merchandise Inventory of $73.
E) Credit to Accounts Payable of $7,227.