Fact Pattern B Questions #13 through #16: The Purchaser is paying an account payable of $10,000 for previously purchased merchandise with cash and taking advantage of a 10% discount (10/10 n/30) offered by the Seller for early payment.

13. Under the periodic method of accounting for inventories, consider the journal entry for the transaction in Fact Pattern B, above, from the Seller's perspective, assuming the Purchaser is entitled to the discount for early payment. The Seller will:

    1. Debit cash for $10,000.

    2. Debit Sales Discount $10,000.

    3. Credit Account Receivable for $10,000.

    4. Debit Account Payable for $9,000.

14. Under the periodic method of accounting for inventories, consider the journal entry for the transaction in Fact Pattern B, above, from the Purchaser's perspective, assuming the Purchaser is entitled to the discount for early payment. The Purchaser will:

    1. Debit Account Payable for $10,000.

    2. Credit cash for $10,000.

    3. Debit Account Receivable for $10,000.

    4. Credit Purchase Discount $9,000.

15. Under the perpetual method of accounting for inventories, consider the journal entry for the transaction in Fact Pattern B, above, from the Seller's perspective, assuming the Purchaser is entitled to the discount for early payment. The Seller will:

    1. Debit cash for $10,000.

    2. Debit Sales Discount $1,000.

    3. Credit Account Payable for $10,000.

    4. Credit Account Receivable for $9,000.

16. Under the perpetual method of accounting for inventories, consider the journal entry for the transaction in Fact Pattern B, above, from the Purchaser's perspective, assuming the Purchaser is entitled to the discount for early payment. The Purchaser will:

    1. Debit Account Receivable for $10,000.

    2. Debit Account Payable for $9,000.

    3. Credit cash for $10,000.

    4. Credit Inventory $1,000.