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Tracy Company, a manufacturer of air conditioners, sold 100 units to Thomas Company on November 17, 2018. 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:
1. Prepare the journal entries to record the purchase by Thomas on November 17 and payment on November 26, 2018, using the gross method of accounting for purchase discounts.
2. Prepare the journal entry to record the payment on December 15, 2018, using the gross method of accounting for purchase discounts.
3. Repeat requirements 1 and 2 using the net method of accounting for purchase discounts.
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