Which journal entry correctly reflects the treatment of the reserve for discounts on accounts payable?

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Profit & Loss Account Dr. and Reserve for Discount on Accounts Payable Cr.Accounts Payable Dr. and Profit & Loss Account Cr.Reserve for Discount on Accounts Payable Dr. and Profit & Loss Account Cr.Reserve for Discount on Accounts Payable Dr. and Accounts Payable Cr.None of the above

Explanation

The appropriate journal entry involves debiting the Reserve for Discount on Accounts Payable account and crediting the Profit & Loss Account. This entry accounts for the reserve as a deduction from sundry creditors and is presented on the liabilities side accordingly.