Paid a creditor for merchandise that was purchased on account less a discount. Debit Credit Cash Accounts Payable Sales Discounts Debit Credit Cash Accounts Payable Inventory Debit Credit Accounts Payable Cash Inventory Debit Credit Accounts Payable Cash Incorrect. Inventory must be reduced by the amount of the purchase discount. Received payment for merchandise that was sold on account, less a discount. Debit Credit Cash Accounts Receivable Debit Credit Cash Accounts Receivable Inventory Debit Credit Cash Accounts Receivable Sales Incorrect. Sales will not be reduced by the amount of the sales discount. That amount will be debited to a contra revenue account. Debit Credit Cash Accounts Receivable Sales Discounts