Question

Required information The following information applies to the questions displayed below.) Tracy Company, a manufacturer of air conditioners, sold 210 units to Thomas Company on November 17, 2021. The units have a list price of $200 each, but Thomas was given a 30% trade discount. The terms of the sale were 3/10, n/30. Thomas uses a perpetual inventory system. Required: 1. Prepare the journal entries to record the (a) purchase by Thomas on November 17 and (b) payment on November 26, 2021. Thomas uses the gross method of accounting for purchase discounts. 2. Prepare the journal entry for the payment, assuming instead that it was made on December 15, 2021. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare the journal entries to record the (a) purchase by Thomas on November 17 and (b) payment on November 26, 2021. Thomas uses the gross 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 Record the purchase of air conditioners. Note: Enter debits before credits. General Journal Debit Credit Date November 17, 2021 Record entry Clear entry View general journal Required 1 Required 2 >

Answer 1

Part 1

Journal

November 17, 2021	Inventory	29,400
	Accounts payable - Tracy company		29,400
November 26, 2021	Accounts payable - Tracy company	29,400
	Cash		28,518
	Inventory		8,82

List price per unit = $200

Number of units purchased = 210

Trade discount = 30%

= 200 x 30%

= $60

Price after trade discount = 200 - 60

= $140

Total cost of inventory purchased = Number of units purchased x Price after trade discount

= 210 x 140

= $29,400

Purchase Discount = Total cost of inventory purchased x 3/100

= 29,400 x 3%

= $8,82

Part 2

Journal

December 15, 2021	Accounts payable - Tracy company	29,400
	Cash		29,400

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