Shankar Company uses a periodic system to record inventory transactions. The company purchases inventory on account on February 2 for $25,000, with terms 2/10, n/30. On February 10, the company pays on account for the inventory. Record the inventory purchase on February 2 and the payment on February 10. (If no entry is required for a particular transaction/event, select "No journal entry required" in the first account field.)

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Business

Mason Robinson

6 June, 08:18

Shankar Company uses a periodic system to record inventory transactions. The company purchases inventory on account on February 2 for $25,000, with terms 2/10, n/30. On February 10, the company pays on account for the inventory. Record the inventory purchase on February 2 and the payment on February 10. (If no entry is required for a particular transaction/event, select "No journal entry required" in the first account field.)

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Cailyn Lucero · Answer 1

The journal entries are shown below:

On February 2

Inventory A/c Dr $25,000

To Account payable A/c $25,000

(Being purchase of inventory is recorded)

On February 10

Account payable A/c $25,000

To Cash A/c $24,500

To Inventory A/c $500

(Being payment is made for cash and discount is recorded under inventory)

The discount is computed below:

= Inventory amount * discount percentage

= $25,000 * 2%

= $500

The remaining balance is credited to the cash account