On May 1,Garcia Corporation bought $6,000 of merchandise from Morris Corporation,terms 2/10,n/30.Garcia paid the invoice on May 6.The journal entry to record the payment under the net approach method would be to:

Question

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The net approach method involves recording the purchase at the discounted price and then adjusting for any discounts lost if the payment is not made within the discount period. In this case, the purchase was for $6,000 but Garcia Corporation is entitled to a 2% discount ($6,000 x 2% = $120). Therefore, the purchase is recorded at the net amount of $5,880 ($6,000 - $120). Since the payment was made within the discount period, no additional adjustment is necessary. The journal entry to record the payment would simply be to debit Vouchers Payable $5,880 and credit Cash $5,880.

On May 1,Garcia Corporation Bought $6,000 of Merchandise from Morris