Tracy Company, a manufacturer of air conditioners, sold 100 units to Thomas Company on November 17, 2011. The units have a list price of $500 each, but Thomas was given a 30% trade discount. The terms of the sale were 2/10, n/30. Thomas uses a periodic inventory system.
Required:
- Prepare the journal entries to record the purchase by Thomas on November 17 and payment on November 26, 2011, using the gross method of accounting for purchase discounts.
- Prepare the journal entry to record the payment on December 15, 2011, using the gross method of accounting for purchase discounts.
- Repeat requirements 1 and 2 using the net method of accounting for purchase discounts