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

Question

Tracy Company, a manufacturer of air conditioners, sold 200 units to Thomas Company on November 17, 2018. The units have a list price of $350 each, but Thomas was given a 30% trade discount. The terms of the sale were 2/10, 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. Complete this question by entering your answers in the tabs below Req 1 and 2 Req 3 Repeat requirements 1 and 2 using the net method of accounting for purchase discounts. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 3 Record purchase of merchandise on account using net method. Note: Enter debits before credits. Date General Journal Debit Credit November 17, 2018

Explanation / Answer

The purchase price= 350*(1-30%)*(1-2%)=240.1 per prodcut and for 200 units it is =200*240.1=48020
Npv 17:
Purchase(db) 48020
Accounts payable(cr) 48020
Nov 26th:
Accounts payable(db) 48020
cash(cr) 48020
Dec 15th:
Accounts payable(db)48020
Interest expense(db) 980
cash(cr) 350*70%*200=49000

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