A company received an invoice from ABC Ltd for 40 units at $10 each, less 25 per cent trade discount, these being items purchased on credit and for resale. It paid this invoice minus a cash discount of 2 per cent. Which of the following journal entries correctly records the effect of the whole transaction in the company’s books? (A) Debit Credit ABC Ltd 300 Purchases 300 Cash 292 Discount allowed 8 ABC Ltd 300 (B) Debit Credit Purchases 300 ABC Ltd 300 ABC Ltd 300 Discount allowed 8 Cash 292 (C) Debit Credit Purchases 300 ABC Ltd 300 ABC Ltd 300 Discount allowed 6 Cash 294 (D) Debit Credit ABC Ltd 400 Purchases 400 Cash 294 Discount allowed 106 ABC Ltd 400