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Asked by Kaylee Rabon on Jun 13, 2024

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Using the gross method, record the payment of the following transaction in time to take the discount. Clip Company bought $15,000 of merchandise, terms 1/15, n/45. The company uses the voucher system and the periodic inventory method.

A) Debit Cash $15,000; credit Vouchers Payable $15,000.
B) Debit Vouchers Payable $15,000; credit Cash $14,850; credit Purchases Discount $150.
C) Debit Vouchers Payable $14,850; credit Cash $14,850.
D) Debit Vouchers Payable $15,000; credit Cash $15,000.

Gross Method

A method of recording purchases of inventory at their gross price without any deduction for trade discounts at the time of purchase.

Periodic Inventory Method

An accounting approach where inventory values and cost of goods sold are determined at the end of an accounting period through physical inventory counts.

Purchases Discount

A reduction in the invoice price of goods, granted by the seller to the buyer for early payment within a specified time frame.

  • Comprehend the methods of applying discounts and handling cash transactions within the voucher system.
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Raphael TaiwoJun 15, 2024
Final Answer :
B
Explanation :
The correct answer is B because it reflects the payment within the discount period, taking advantage of the 1% discount on the $15,000 purchase, which amounts to $150. Therefore, $14,850 is paid in cash, and the $150 discount is recorded as a Purchases Discount.

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