Answer:
1)
The journal entries using the gross method are:
November 17, 2016, purchased merchandise on account, terms 2/10, n/30.
Dr Merchandise inventory 35,000
Cr Accounts payable 35,000
November 26, 2016, invoice paid to Tracy Company within discount period
Dr Accounts payable 35,000
Cr Cash 34,300
Cr Purchase discounts 700
2)
journal entry to record a later payment of the invoice after discount period
December 15, 2016, invoice paid to Tracy Company
Dr Accounts payable 35,000
Cr Cash 35,000
3)
November 17, 2016, purchased merchandise on account, terms 2/10, n/30.
Dr Merchandise inventory 34,300
Cr Accounts payable 34,300
November 26, 2016, invoice paid to Tracy Company within discount period
Dr Accounts payable 34,300
Cr Cash 34,300
December 15, 2016, invoice paid to Tracy Company after discount period
Dr Accounts payable 34,300
Dr Purchase discount lost 700
Cr Cash 35,000
When you use the net method, any lost discount must be recorded as an expense.
