Question

Lakeside Restaurant purchased inventory from Valley Packing, receiving an invoice dated February 3, 20X4, for $2,000 with terms 2/10, n/30.
Using the net AND gross method of recording purchases, complete the following:

1. Record the purchase of the inventory
2. Record the payment of the invoice within the discount period
3. Record the payment of the invoice after the discount period

Thanks

Answer 1

Net Method:

Event	Account Name	Dr	Cr
1	Purchase [2000*98%]	$    1,960
	Account Payable		$    1,960
	(To record Inventory purchased on account)
2	Account Payable	$    1,960
	Cash		$    1,960
	( To record payment of account payable)
3	Account Payable	$    1,960
	Purchase Discount lost [2000*2/100]	$          40
	Cash		$    2,000
	( To record payments along with discount lost)

Gross Method:

Event	Account Name	Dr	Cr
1	Purchase	$    2,000
	Account Payable		$    2,000
	(To record Inventory purchased on account)
2	Account Payable	$    2,000
	Purchase Discount		$          40
	Cash		$    1,960
	( To record payments along with discount received)
3	Account Payable	$    2,000
	Cash		$    2,000
	( To record payment of account payable)