Lynn Corporation bought $8,000 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. Therefore, the entry would include debiting Vouchers Payable for the net amount, debiting Discounts Lost for the discount not taken, and crediting Cash for the full amount paid.

Lynn Corporation Bought $8,000 of Merchandise from Woods Corporation, Terms