Laird Corporation bought $5,000 of merchandise from Woods Corporation,terms 2/10,n/30.The company uses the periodic inventory system and the voucher system.The journal entry to record the payment under the net method after the discount period would be to:

Question

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Under the net method, the purchase is initially recorded at the net amount assuming the discount will be taken. If the payment is made after the discount period, the discount is lost and must be recorded as an expense. Thus, Vouchers Payable is debited for the net amount ($4,900), Discounts Lost is debited for the discount not taken ($100), and Cash is credited for the full amount ($5,000).

Laird Corporation Bought $5,000 of Merchandise from Woods Corporation,terms 2/10,n/30