Question

XYZ Co. purchased merchandise on June 10 at a $5,000 invoice price with terms of 2/10, n/30 and paid for the merchandise on June 25. Illustrate the required entries to record and pay for this purchase under both the gross method and the net method by matching the action on the left with the method on the right. (Assume a perpetual inventory system is used.)

Answer 1

Answer:

Credit Cash for $5,000 on June 25.: Both methods

Credit Cash for $4,900 on June 25.: Neither method

Debit Discounts lost for $100 on June 25.: Net method

Debit Merchandise inventory for $5,000 for June 10.:Gross method

Explanation:

Based on the information given the required entries to record and pay for this purchase under both the GROSS METHOD and the NET METHOD by matching the action on the left with the method on the right will be :

Credit Cash for $5,000 on June 25.: BOTH METHODS

Credit Cash for $4,900 on June 25.: NEITHER METHOD

(100%-2%*$5,000)

Debit Discounts lost for $100 on June 25.: NET METHOD

(2%*$5,000)

Debit Merchandise inventory for $5,000 for June 10.:GROSS METHOD