Question

On July 15, 2018, the Nixon Car Company purchased 2,300 tires from the Harwell Company for $35 each. The terms of the sale were 4/10, 1/30. Nixon uses a periodic inventory system and the net 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 2 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 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.) View transaction list 1 Record purchase of tires. 2 Record payment of July 15 purchase. Credit Note : - journal entry has been entered

Answer 1

1) Journal entry

Date	account and explanation	Debit	Credit
July 15	Purchase	2208
	Account payable		2208
	(To record purchase)
July 23	Account payable	2208
	Cash (2300*96%)		2208
	(to record amount paid)

2) Journal entry

Date	Account and explanation	Debit	Credit
Aug 15	Account payable	2208
	Purchase discount forfeited	92
	Cash (2300*96%)		2300
	(to record amount paid)

c) The July 15 entry would include a debit to the Merchandise inventory account instead of to purchase