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Required information Exercise 8-11 (Algo) Trade and purchase discounts; the gross method and the net method...

Required information

Exercise 8-11 (Algo) Trade and purchase discounts; the gross method and the net method compared [LO8-3]

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Tracy Company, a manufacturer of air conditioners, sold 140 units to Thomas Company on November 17, 2021. The units have a list price of $450 each, but Thomas was given a 20% trade discount. The terms of the sale were 2/10, n/30. Thomas uses a perpetual inventory system.

Exercise 8-11 (Algo) Parts 1 and 2

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.

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.

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