Question

Required information [The following information applies to the questions displayed below.] Tracy Company, a manufacturer of air conditioners, sold 240 units to Thomas Company on November 17, 2021. The units have a list price of $350 each, but Thomas was given a 40% trade discount. The terms of the sale were 2/10, n/30. Thomas uses a perpetual inventory system. 3. Prepare the journal entries to record the purchase by Thomas on November 17 and payment on November 26, 2021 and December 15, 2021 using the net method of accounting for purchase discounts. Complete this question by entering your answers in the tabs below. Req 3B Req 3A Prepare the journal entries to record the (a) purchase by Thomas on November 17 and (b) payment on November 26, 2021. Thomas uses the net 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 K 1 2 Record the purchase of air conditioners.

Answer 1

3A
		Debit	Credit
November 17,2021	Inventory	49392		=(240*350)*(1-40%)*(1-2%)
	Accounts Payable		49392
November 26,2021	Accounts Payable	49392
	Cash		49392
3B
		Debit	Credit
December 15,2021	Accounts Payable	49392
	Interest expense	1008
	Cash		50400	=(240*350)*(1-40%)

Answer 2

“Interest expense” should be “purchase discount loss” and it’s the difference between the accounts payable and cash which is calculated as shown above