Question 1

Read the Chen Automotive scenario and answer the following question.

Upon review, how would you recommend the prepayment be recorded?

• Continue handling the prepayment in the same way.

• Enter a bill for only 75% of the inventory.

• Create a bill and post to purchases until inventory arrives.

• Set up a Vendor Prepayment account and item, and use that.

• Enter a purchase order against Accounts Payable.