On May 1, Ace Bonding Company purchased inventory costing $2,000 on account with terms 2/10, n/30. On May 18, Ace pays for this inventory and records which of the following using a periodic inventory system?
1. Accounts Payable 2,000
Cash 2,000
2. Accounts Payable 1,960
Purchase Discounts 40
Cash 2,000
3. Accounts Payable 2,000
Purchase Discounts 40
Cash 1,960
4. Cash 2,000
Accounts Payable 2,000
A) Option 1
B) Option 2
C) Option 3
D) Option 4
Answer: A
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