Neco Model Questions Vol1 2023 Financial Accounting Question 28

Practice objective / multiple choice question 28 from the 2023 Neco Model Questions Vol1 Financial Accounting examination.

Neco Model Questions Vol1 2023 Financial Accounting Objective / Multiple Choice Easy Difficulty
Question 28 NECO_MODEL_QUESTIONS_VOL1 • 2023 • FINANCIAL_ACCOUNTING • objective

On 1 March a company bought inventory on credit for \(\text{₦}150,000\). Freight charges of \(\text{₦}5,000\) were paid in cash. The supplier offered a 2 % discount if payment is made within 30 days. On 20 March the company settled the invoice within the discount period. Record the journal entries for (i) the purchase, (ii) the freight, and (iii) the payment including the discount.

Answer Options

A. i) Dr Purchases ₦150,000; Cr Accounts Payable ₦150,000. ii) Dr Purchases ₦5,000; Cr Cash ₦5,000. iii) Dr Accounts Payable ₦150,000; Cr Cash ₦150,000.
B. i) Dr Purchases ₦150,000; Cr Accounts Payable ₦150,000. ii) Dr Purchases ₦5,000; Cr Cash ₦5,000. iii) Dr Accounts Payable ₦155,000; Cr Cash ₦151,900; Cr Discount Received ₦3,100.
Correct Answer C. i) Dr Purchases ₦150,000; Cr Accounts Payable ₦150,000. ii) Dr Purchases ₦5,000; Cr Cash ₦5,000. iii) Dr Accounts Payable ₦150,000; Cr Cash ₦147,000; Cr Discount Received ₦3,000.
D. i) Dr Purchases ₦150,000; Cr Accounts Payable ₦150,000. ii) Dr Freight Expense ₦5,000; Cr Cash ₦5,000. iii) Dr Accounts Payable ₦150,000; Cr Cash ₦147,000; Cr Discount Received ₦3,000.
Correct Answer
C
Correct Option:
i) Dr Purchases ₦150,000; Cr Accounts Payable ₦150,000. ii) Dr Purchases ₦5,000; Cr Cash ₦5,000. iii) Dr Accounts Payable ₦150,000; Cr Cash ₦147,000; Cr Discount Received ₦3,000.

About This Question

This is Neco Model Questions Vol1 2023 Financial Accounting Question 28. It is one of the objective questions from the 2023 Neco Model Questions Vol1 Financial Accounting examination.

Difficulty level: Easy .

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