Question 8

Malinga Traders bought inventory from Trinchado Traders the listed price being R880 a unit. Malinga Traders bought 10 units. When they received their statement, though, they were notified that they actually qualified for a 5% trade discount, and have been charged the reduced amount. Both businesses are VAT vendors, and use the perpetual inventory system. What would the adjusting entry be in Malinga Traders books?

Select one:

a. Debit debtors R440; credit purchases R385.96; credit VAT output R54.04

b. Debit creditors R440; credit trading inventory R382.61; credit VAT output R57.39

c. Debit creditors R440; credit purchases R385.96; credit VAT output R54.04

d. Debit debtors R440; credit trading inventory R382.61; credit VAT output R57.39