Question

In: Accounting

On July 15, 2021, the Nixon Car Company purchased 1,500 tires from the Harwell Company for...

On July 15, 2021, the Nixon Car Company purchased 1,500 tires from the Harwell Company for $46 each. The terms of the sale were 3/10, n/30. Nixon uses a perpetual inventory system and the gross method of accounting for purchase discounts.

Required: 1. Prepare the journal entries to record the purchase on July 15 and payment on July 23, 2021.

2. Prepare the journal entry for the payment, assuming instead that it was made on August 15, 2021.

Solutions

Expert Solution

1
Debit Credit
July 15, 2021 Inventory 69000 =1500*46
      Accounts payable 69000
July 23, 2021 Accounts payable 69000
      Inventory 2070 =69000*3%
      Cash 66930
2
August 15, 2021 Accounts payable 69000
      Cash 69000

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