Purchases with Discount (gross)
Illustrative Entry
Entry to record initial purchase (gross):
| 11-5-X7 |
Purchases |
5,000 |
||
| Accounts Payable |
5,000 |
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| Purchased inventory on account, terms 2/10,n/30 |
Entry to record payment within the discount period:
| 11-13-X7 |
Accounts Payable |
5,000 |
||
| Purchase Discounts |
100 |
|||
| Cash |
4,900 |
|||
| Paid outstanding payable within discount period, 2% discount taken ($5,000 X 2% = $100) |
OR
Entry to record payment outside of the discount period:
| 11-29-X7 |
Accounts Payable |
5,000 |
||
| Cash |
5,000 |
|||
| Paid outstanding payable outside of the discount period |
| XX-XX-XX |
Purchases |
3,000 |
||
| Accounts Payable |
3,000 |
|||
| Purchased inventory on account |