Elkins Corporation uses the perpetual inventory method. On March 1, it purchased $33,000 of inventory, terms 2/10, n/30. On March 3, Elkins returned goods that cost $3,000. On March 9, Elkins paid the supplier. On March 9, Elkins should credit:a. purchase discounts for $600.b. inventory for $600.c. purchase discounts for $660.d. inventory for $660.
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Let's break down the transactions:
- Purchase of inventory on March 1: $33,000, terms 2/10, n/30.
- Return of goods on March 3: $3,000.
- Payment to the supplier on March 9, within the discount period.
The discount taken for early payment (2% discount on $33,000) is $660 ($33,000 * 2%).
When Elkins pays the supplier within the discount period, they would record the transaction by crediting the Purchase Discounts account.
Therefore, the correct entry on March 9 would be:
c. Purchase discounts for $660.