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Homework answers / question archive / Malone Corporation uses the perpetual inventory method
Malone Corporation uses the perpetual inventory method. On March 1, it purchased P30,000 of inventory, terms 2/10, n/30. On March 3, Malone returned goods that cost P3,000. On March 9, Malone paid the supplier. On March 9, Malone should credit a. purchase discounts for P600. b. inventory for P600. c. purchase discounts for P540. d. inventory for P540.
Answer
d .
Explanation
If Malone Corporation paid within 10 days they will get a discount of 2% on outstanding.
Discount = (P30,000-P3,000)*2%
= P27,000*2%
= P540
As they are following a perpetual inventory system So, this discount amount will adjust to inventory.
So, on March 9 the following journal entry will be passed :
| Accounts Payables | 27000 | |
| Cash (27000 - 540) | 26460 | |
| Inventory (2% * 27000) | 540 |
