High School

For each of the following transactions, select the proper accounting entry from the list provided.

**Transaction:** Inventory was received but not paid for on a purchase order. Payment terms were 2% 10, Net 30.

1. DR A/C #12100 Inventory Asset
CR A/C #20000 Accounts Payable

2. DR A/C #12100 Inventory Asset
CR A/C #20000 Accounts Payable

3. DR A/C #50100 Cost of Goods Sold
CR A/C #50100 Cost of Goods Sold
CR A/C #54300 Job Materials

4. DR A/C #12100 Inventory Asset
CR A/C #20000 Accounts Payable

5. None of the above

Answer :

The proper accounting entry for the given transaction is:

DR A/C #12100 Inventory Asset

CR A/C #20000 Accounts Payable

This entry reflects the receipt of inventory but not yet making the payment. It increases the inventory asset account (debit) and records the liability to the supplier in the accounts payable account (credit). This entry does not involve the Cost of Goods Sold or the Job Materials accounts.

Therefore, option 1 is the correct accounting entry for this transaction

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