Answer:
The entry reflects a debit to the Accounts Payable and a credit to the Merchandise Inventory and Cash, signifying full settlement of debt with merchandise $50 and cash $2,450.
Explanation:
When Accounts Payable is debited, it means that it is being paid. In this case, there are two stated ways for the settlement. The supplier was paid $50 in goods and $2,450 in cash. While, the supplier was being owed the sum of $2,500, he agreed to accept merchandise at cost of $50 and the remainder in cash of $2,450. This entry also satisfies the accounting equation, keeping the two sides in balance, as Liabilities are reduced by $2,500 and Assets are reduced by the same amount.
