Schrand Corporation purchased materials from a supplier that offers credit terms of 2/15, n/60. It purchased $10,000 of merchandise inventory from that supplier on January 20.
a. Prepare journal entries to record the purchase of this inventory and the cash payment to the supplier applying the net-of-discount method.
Date Account Debit Credit
Jan. 20 Inventory 9,800 0
Accounts payable 0 9,800
To record purchase of inventory.
Feb. 15 Accounts payable 9,800 0
Interest expense, discounts lost 200 0
Cash 0 10,000
To record cash payment to supplier.
b. Set up the necessary T-accounts and post the journal entries to the T-accounts.
•Note: Enter your answers, in transaction order, in the first open field of the appropriate column in each account.
Cash
0 10,000
Accounts payable
9,800 9,800
0 0
Interest expense, discounts lost
200 0
Inventory
9,800 0
0 0
Cost of goods sold
0 0
