Farthington Soccer Supplies purchases merchandise from a supplier on credit, terms 1/10, n/30 for $15,800. Assume the company uses a perpetual inventory system, and records purchases using the gross method. When recording the purchase transaction in its purchases journal, Farthington would enter:

What is the correct answer?

Multiple Choice

• $15,800 in the Accounts Payable Cr. column and $15,800 in the Inventory Dr. column.

• $15,800 in the Accounts Payable Cr. column and $15,800 in the Supplies Dr. column.

• $15,800 in the Inventory Dr. column, $15,642 in the Accounts Payable Cr. column, and $158 in the Purchase Discount Cr. column.

• $15,642 in the Inventory Dr. column and $15,642 in the Accounts Payable Cr. column.

• $15,800 in the Other Accounts Dr. column and $15,800 in the Inventory Cr. column.