On December 28, 2018, Videotech Corporation (VTC) purchased 15 units of a new sa

Question

On December 28, 2018, Videotech Corporation (VTC) purchased 15 units of a new satellite uplink system from Tristar Communications for $28,000 each. The terms of each sale were 1/10, 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. (f no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Explanation / Answer

Journal entry

Date accounts & explanation debit credir Dec 28, 2018 Merchandise inventory (28000*15) 420000      account payable 420000 (To record purchase) Jan 6,2019 Account payable 420000      Cash 415800      Merchandise inventory 4200 (To record amount paid)

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