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Tracy company, a manufacturer of air conditioners, sold 100 units to thomas company on november 17, 2013. 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, 2013, using the gross method of accounting for purchase discounts.

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meerkat18
500*.30 = 150 (trade discount per air conditioner)500 – 180 = 320
100*320 = 32,000
November 17Debit: Accounts receivable 32,000Credit: Merchandise inventory 32,000
32,000*.02 = 640 (purchase discount per air conditioner)32,000 – 640 = 31,360
November 26Debit: Cash 31,360Debit: Sales discounts 640Credit: Accounts receivable 32,000