Use the following information to answer questions 5 through 7.
On May 2nd, Tesoro purchased $180,000 worth of inventory on credit terms 3/10, net 30.
On May 5th, Tesoro returned $20,000 worth of that inventory to the supplier.
On May 9th, Tesoro paid for the inventory.
The journal entry to record Tesoro's return of merchandise on May 5th will include a:
A. credit to Inventory for $20,000.
B. credit to Cost of Goods Sold for $20,000.
C. credit to Accounts Payable for $20,000.
D. debit to Accounts Payable for $19,400 and credit to Cash for $19,400.
The journal entry to record Tesoro's payment for the inventory on May 9th will include a:
A. debit to Purchase Discount for $4,800.
B. debit to Accounts Payable for $160,000.
C. credit to Cash for $174,600.
D. debit to Inventory for $5,400.
E. debit to Accounts Payable for $155,200.
A company had beginning inventory of $55,000. During the month of February, the company recorded the following events:
- Purchased merchandise for $120,000 with the terms 2/10, net 30.
- Paid $2,000 transportation costs on the shipment.
- Returned $5,000 of the merchandise.
- Paid the invoice within the discount period.
Assuming there were no sales during the month, what is the balance in the company's Inventory account at the end of February?
A. $174,300
B. $170,000
C. $169,700
D. $182,000
E. $167,700
