Purchases with Discount (net)
Illustrative Entry
Entry to record initial purchase (net):
| 11-5-X7 |
4,900 |
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| Accounts Payable |
4,900 |
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| Purchased $5,000 of inventory on account, terms 2/10,n/30 ($5,0000 - ($5,000 X 2%) = $4,900) |
Entry to record payment within the discount period:
| 11-13-X7 |
4,900 |
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| Cash |
4,900 |
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| Paid outstanding payable within discount period, |
OR
Entry to record payment outside of the discount period:
| 11-29-X7 |
4,900 |
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| Purchase Discounts Lost |
100 |
|
||
| Cash |
5,000 |
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| Paid outstanding payable outside of the discount period |