Lol music store uses the perpetual inventory system to account for its merchandise. on november 17, it purchased $1,000 of merchandise with terms of 2/5,n/60. if payment is made on november 21, demonstrate the required journal entry to record the payment by selecting all of the correct actions below. (check all that apply.)

The answers are:

Dr accounts payable 1,000Cr cash 980Cr merchandise inventory 20

Explanation:

Since accounts payable is a liability, when it decreases, it should be debited. Since the merchandise was paid (less debt), then the company's liabilities decrease.

Since cash is an asset, when an asset decreases, it should be credited. LOL Music Store paid its debt in cash, therefore decreasing its cash account.

Since the purchase discount reduces the value of the inventory and inventory is an asset, when an asset decreases, it should be credited.

Secured loans are protected by collateral security. examples: title loans where the borrower uses the car title as collateral security interest rates are lower and repayments are longer therefore risk is low as a collateral security is given as guarantee to the bank in case of failure to pay the loanunsecured loans are not protected by collateral security but it is given on the creditworthiness of the borrower, trusting that she/he will pay on time. examples; payday loans is a short term loan where the borrower lends money from the bank and pays is back when the borrower receives his/her wages.interest rates are high and repayments are shorter. but the risk is high as no collateral security is given as a guarantee to the bank for payment of the loan