Cheshire Co. purchased $1,000 of products from the Mad Hatter, Inc. with terms 3/15, n/30. Cheshire uses the net method to record purchases, but did not pay the invoice within the discount period. Which is a TRUE statement about the journal entry that Cheshire will make to record payment of the invoice?
A) They will debit Accounts Payable for $1,000
B) They will debit Inventory for $30
C) They will credit Cash for $970
D) They will credit Lost Discount for $30
B) They will debit Inventory for $30
Explanation: lost discount is debited to Inventory — invoice amount × discount: $1,000 × = $30
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