Assume that the net price method of recording purchases is used and the business uses the perpetual method of inventory recording. Record the purchase of goods for $5000 on credit, on terms of 3/10, n/30. Ignore GST.

Question

Quizplus · Accepted Answer

The net price method means that we record the purchase at the net amount after deducting any discount received for early payment. In this case, the terms are 3/10, n/30, which means that the buyer can get a 3% discount if they pay within 10 days, otherwise, the full amount is due within 30 days.
To calculate the net price:
$5000 - (3% x $5000) = $4850

Therefore, we would debit inventory for $4850 and credit accounts payable for $4850 to record the purchase. No discount is given or taken, so we don't need to include any discount entries.

Assume That the Net Price Method of Recording Purchases Is