Brief Exercise 8-4 Purchase discounts; gross method [LO8-3] On December 28, 2018

Question

Brief Exercise 8-4 Purchase discounts; gross method [LO8-3] On December 28, 2018, Videotech Corporation (VTC) purchased 13 units of a new satellite uplink system from Tristar Communications for $28,000 each. The terms of each sale were 2/10, n/30. VTC uses the gross method to account for purchase discounts and a perpetual inventory system. VTC paid the net-of-discount amount on January 6, 2019. Prepare the journal entries on December 28 and January 6 to record the purchase and payment. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Journal entry worksheet

Record the inventory purchase on account.

Note: Enter debits before credits.

Explanation / Answer

Solution

Date

accounts & explanation

debit

credit

Dec 28, 2018

Merchandise inventory (28000*13)

364,000

     account payable

364,000

(To record purchase)

Jan 6,2019

Account payable

364,000

     Cash

360,360

     Merchandise inventory

3640

(To record amount paid)

Date

accounts & explanation

debit

credit

Dec 28, 2018

Merchandise inventory (28000*13)

364,000

     account payable

364,000

(To record purchase)

Jan 6,2019

Account payable

364,000

     Cash

360,360

     Merchandise inventory

3640

(To record amount paid)

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