On December 28, 2016, Videotech Corporation (VTC) purchased 15 units of a new sa
ID: 2469187 • Letter: O
Question
On December 28, 2016, Videotech Corporation (VTC) purchased 15 units of a new satellite uplink system from Tristar Communications for $26,000 each. The terms of each sale were 1/10, n/30. VTC uses the net method to account for purchase discounts and a perpetual inventory system. VTC paid the net-of-discount amount on January 6, 2017.
Prepare the necessary journal entries assuming that VTC uses the net method to account for purchase discounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
On December 28, 2016, Videotech Corporation (VTC) purchased 15 units of a new satellite uplink system from Tristar Communications for $26,000 each. The terms of each sale were 1/10, n/30. VTC uses the net method to account for purchase discounts and a perpetual inventory system. VTC paid the net-of-discount amount on January 6, 2017
Prepare the necessary journal entries assuming that VTC uses the net method to account for purchase discounts.
* record the inventory putchase on account
*record payment to Tristar
Prepare the necessary journal entries assuming that VTC uses the net method to account for purchase discounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
On December 28, 2016, Videotech Corporation (VTC) purchased 15 units of a new satellite uplink system from Tristar Communications for $26,000 each. The terms of each sale were 1/10, n/30. VTC uses the net method to account for purchase discounts and a perpetual inventory system. VTC paid the net-of-discount amount on January 6, 2017
Prepare the necessary journal entries assuming that VTC uses the net method to account for purchase discounts.
* record the inventory putchase on account
*record payment to Tristar
Explanation / Answer
The net method is a way to record purchases of inventory with a cash discount. The net method assumes the retailer always takes advantage of the discounted cash price and records the purchased inventory at the discounted price. If the retailer isn't able to take advantage of the discounted price, the discount is lost and an entry is made to reverse the discounted take in the original purchase entry.
Journal Entries in the books of Videotech Corporation Date Account Debit$ Credit$ Dec.28,2016 Inventory 386,100 Accounts Payable 386,100 ($26000*15 *99%) Jan.6,2017 Accounts Payable 386,100 Cash 386,100Related Questions
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