Question

On July 15, 2018, the Nixon Car Company purchased 1,700 tires from the Harwell Company for $50 each. The terms of the sale were 3/10, n/30. Nixon uses a periodic 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, 2018.
2. Prepare the journal entry to record the payment on August 15, 2018.
3. If Nixon instead uses a perpetual inventory system, explain any changes to the journal entries created in requirements 1 and

Prepare the journal entries to record the purchase on July 15 and payment on July 23, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Journal entry worksheet

Required 1; Record purchase of tires.

Note: Enter debits before credits.

Date	General Journal	Debit	Credit
July 15, 2018

2;

Record payment of July 15 purchase.

Note: Enter debits before credits.

Date	General Journal	Debit	Credit
July 23, 2018

Required2:

Record payment of July 15 purchase.

Note: Enter debits before credits.

Date	General Journal	Debit	Credit
August 15, 2018

Answer 1

15-Jul	Purchases	85000		=1700*50
	Accounts payable		85000
23-Jul	Accounts payable	85000
	Cash		82450
	Purchase discounts		2550	=85000*3%
15-Aug	Accounts payable	85000
	Cash		85000
3
The July 15 entry would include a debit to the inventory account instead of to Purchases
The July 23 entry would include a credit to the inventory account instead of to Purchases discounts