Tracy Company, a manufacturer of air conditioners, sold 290 units to Thomas Comp

Q: Tracy Company, a manufacturer of air conditioners, sold 290 units to Thomas Comp

In the books of Thomas GROSS METHOD Solution:(1): Journal entries to record purchase: Journal entry to record payment: Journal entry to record payment: Solution:(2): NET METHOD Journal entry to record Purchase: Journal entry to record payment: Journal entry to record payment: Date particulars Debit($) Credit ($) Nov 17 Purchases(290*200*75%) 43,500 Accounts payable 43,500

ID: 2553340 • Letter: T

Question

Tracy Company, a manufacturer of air conditioners, sold 290 units to Thomas Company on November 17, 2018. The units have a list price of $200 each, but Thomas was given a 25% trade discount. The terms of the sale were 4/10, n/30. Thomas uses a periodic inventory system. Required: 1. & 2. Prepare the journal entries to record the purchase by Thomas on November 17 and payment on November 26, 2018 and December 15, 2018 using the gross method of accounting for purchase discounts. 3. Repeat requirements 1 and 2 using the net method of accounting for purchase discounts.

Explanation / Answer

In the books of Thomas

GROSS METHOD

Solution:(1): Journal entries to record purchase:

Journal entry to record payment:

Solution:(2): NET METHOD

Journal entry to record Purchase:

Journal entry to record payment:

Date particulars Debit($) Credit ($) Nov 17 Purchases(290*200*75%) 43,500 Accounts payable 43,500

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Tracy Company, a manufacturer of air conditioners, sold 200 units to Thomas Comp

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Tracy Company, a manufacturer of air conditioners, sold 290 units to Thomas Comp

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