The question is Mr. Round purchased 200 tires on account for $100/tire from Goodyear. Terms 1/10, n/30, FOB shipping point, $100 (all freight must be paid upfront with cash).|||Perpetual Inventory System
At the time of the purchase:
Dr Merchandise Inventory 20,100
Cr Accounts Payable 20,000
Cr Cash 100
Payment made within discount period
Dr Accounts Payable 20,000
Cr Cash 19,800
Cr Merchandise Inventory 200
Periodic Inventory System
At the time of the purchase:
Dr Purchases 20,000
Dr Freight-In 100
Cr Accounts Payable 20,000
Cr Cash 100
Payment made within discount period
Dr Accounts Payable 20,000
Cr Cash 19,800
Cr Purchases Discount 200
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