Question
On June 1, Neighbor Company purchased inventory on account with a cost of $5,000. The credit terms were 2/10, net 30. On June 2, Neighbor
On June 1, Neighbor Company purchased inventory on account with a cost of $5,000. The credit terms were 2/10, net 30. On June 2, Neighbor Company returned 50 percent of the inventory. Neighbor Company uses the perpetual inventory system. On June 8, Neighbor Company paid for the inventory. What journal entry did Neighbor Company prepare on June 8?
A. debit Accounts Payable for $2,500 and credit Cash for $2,500
B. debit Accounts Payable for $2,500, credit Inventory for $50 and credit Cash for $2,450
C. debit Purchase Discount for $50, debit Cash for $2,450 and credit Accounts Payable for $2,500
D. debit Accounts Payable for $2,500, credit Purchase Discount for $50 and credit Cash for $2,450
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