Question

a company purchased $900 worth of merchandise on account with net 30 terms. fifteen days after purchasing the merchandise, the company pays the $900 bill. what journal entry is used to record this bill payment, using a perpetual inventory system? select an answer from the options below. a dr. merchandise inventory $900 cr. cash $900 b dr. accounts payable $900 cr. cash $900 c dr. cash $900 cr.

Explanation:

When a company pays a bill for merchandise purchased on account, the liability (Accounts Payable) is reduced (debited) and the asset (Cash) used for payment is also reduced (credited). In a perpetual inventory system, the initial purchase was already recorded to Merchandise Inventory. Now, it's about settling the payable.

Answer:

B. Dr. Accounts Payable $900 Cr. Cash $900