Prepare the journal entry to record the payment of accounts

Prepare the journal entry to record the payment of accounts payable for inventory that was purchased with the terms 2/10 net 30. The inventory purchase was for 20,000 and the payment will be within the discount period.

Solution

Answer:

Inventory a/c                 Dr. 20000

        To Accounts Payable           20000

Accounts Payable a/c   Dr.   20000

        To Cash                                      19600

        To Inventory                                    400

20000 x 2% = 400