The journal entries required for purchase and sales transactions using the perpetual system are more complex than under the periodic system but offer the advantage of

Oct. 15	Accounts Payable	4,000
	Merchandise Inventory		40
	Cash		3,960

Based on this information, it is likely that the company:

a. Collected cash for inventory sold on credit and recognized a 1% sales discount.

b. Purchased inventory for cash.

c. Paid for inventory purchased on credit and took advantage of a 1% purchase discount.

d. Sold inventory for cash.