On September 12, Ryan Company sold merchandise in the amount of $7000 to Johnson Company, with credit terms of 3/10, n/30. The cost of the items sold is $4600. Johnson uses the periodic inventory system and the net method of accounting for purchases. Johnson pays the invoice on September 18, and takes the appropriate discount. The journal entry that Johnson makes on September 18 is:

A.

Accounts payable7000? 
  Purchases discounts 210?
  Cash 6790?

B.
Cash6790? 
Purchases discounts210? 
  Accounts payable 7000?

C.
Accounts payable4600? 
  Merchandise inventory 138?
  Cash 4462?

D.
Purchases6790? 
  Cash 6790?

E.
Accounts payable6790? 
  Cash 6790?


Answer: E

Business

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