Question

Avery, Inc. uses the periodic inventory system. On February​ 1, the corporation purchased inventory on account for $10,000. The terms of invoice were 5​/10, ​n/30. The amount due was paid on February 9. Which of the following journal entries correctly records the payment in the books of​ Avery, Inc.?

a) Debit Accounts Payable $10,000, Credit Cash $10,000
b) Debit Inventory $10,000, Credit Accounts Payable $10,000
c) Debit Cash $10,000, Credit Accounts Payable $10,000
d) Debit Accounts Receivable $10,000, Credit Cash $10,000

Answer 1

The correct journal entry to record the payment in the books of Avery, Inc. is Debit Cash $10,000, Credit Accounts Payable $10,000.

Step-by-step explanation:

The journal entry that correctly records the payment in the books of Avery, Inc. is option c) Debit Cash $10,000, Credit Accounts Payable $10,000. The correct journal entry to record the payment in the books of Avery, Inc. is Debit Cash $10,000, Credit Accounts Payable $10,000.

When the payment is made on February 9, cash is debited to show the decrease in cash and accounts payable is credited to indicate the payment made to the supplier for the inventory purchased.