James Company experienced the following events during its first accounting period: (1) Purchased $10,000 of inventory on account under terms 1/10 n/30. (2) Returned $2,000 of the inventory purchased in Event 1 (3) Paid the remaining balance in account payable within the discount period for the inventory purchased in Event 1 Immediately after the three events have been recognized, the balance in the inventory account is Multiple Choice $8,000 Zero

James Company experienced the following events during its first accounting period: (1) Purchased $10,000 of inventory on account under terms 1/10 n/30. (2) Returned $2,000 of the inventory purchased in Event 1 (3) Paid the remaining balance in account payable within the discount period for the inventory purchased in Event 1 Immediately after the three events have been recognized, the balance in the inventory account is Multiple Choice $8,000 Zero

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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James Company experienced the following events during its first accounting period: (1) Purchased $10,000 of inventory on account under terms 1/10 n/30. (2) Returned $2,000 of the inventory purchased in Event 1. (3) Paid the remaining balance in account payable for the inventory purchased in Event 1. Based on this information, which of the following shows how paying off the account payable (Event 3) will affect the Company's financial statements? Balance Sheet Income Statement Assets = Liabilities + A. (8,000) B. (7,900) C. (8,000) D. (7,920) Multiple Choice Option A Option D Option C Option B (8,000) (7,900) (8,000) (7,920) Stockholders' Equity n/a n/a n/a n/a Revenue n/a n/a n/a n/a Expense n/a 7,900 8,000 n/a Net Income n/a (7,900) (8,000) n/a Statement of Cash Flows (8,000) Operating Activity (7,900) Operating Activity (8,000) Operating Activity (7,920) Operating Activity
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