Question - Tracy Company, a manufacturer of air conditioners, sold 100 units to Thomas on November 17, 2013. The units have a list price of $500 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.
1. Prepare the journal entries to record the purchase by Thomas on November 17 and payment on November 26.
2. Prepare the journal entry to record the payment of December 15m 2013, using the gross method of accounting for purchase discounts.
3. Repeat requirements 1 and 2 using the net method.