Clip Company bought $11,000 of merchandise from Tarpon Corporation, terms 1/10, n/45. Clip Company uses the voucher system and the periodic inventory method. The journal entry to record the payment under the gross method after the discount period would be to:

Question

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Under the gross method, the purchase is recorded at its full amount, and if the payment is made after the discount period, the full amount is paid. Therefore, the entry is to debit Vouchers Payable for $11,000 and credit Cash for $11,000, reflecting the payment of the full invoice amount without taking any discount.

Clip Company Bought $11,000 of Merchandise from Tarpon Corporation, Terms