James Company experienced the following events during its first accounting period:

1. (1) Purchased $10,000 of inventory on account under terms 1/10 n/30.
2. (2) Returned $2,000 of the inventory purchased in Event 1.
3. (3) Paid the remaining balance in account payable for the inventory purchased in Event 1.

Based on this information, which of the following shows how paying off the account payable (Event 3) will affect the Companys financial statements?

	Balance Sheet					Income Statement					Statement of Cash Flows
	Assets	=	Liabilities	+	Stockholders Equity	Revenue		Expense	=	Net Income
A.	(8,000)		(8,000)		n/a	n/a		n/a		n/a	(8,000) OA
B.	(7,900)		(7,900)		n/a	n/a		7,900		(7,900)	(7,900) OA
C.	(8,000)		(8,000)		n/a	n/a		8,000		(8,000)	(8,000) OA
D.	(7,920)		(7,920)		n/a	n/a		n/a		n/a	(7,920) OA

Multiple Choice

• Option C

• Option A

• Option B

• Option D