Question:
Ace Corp. purchased merchandise during 2014 on credit for $500,000; terms 2/10, n/30. (b) All of the gross liability except $88,000 was paid within the discount period. (c) The remainder was paid within the 30-day term. At the end of the annual accounting period, December 31, 2014, 90% of the merchandise had been sold and 10% remained in inventory. The company uses a periodic system.
Instructions: Assuming that the net method is used for recording purchases, prepare the entries for the purchase (a) and two subsequent payments (b & c.)