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Olavssen Hardware regularly buys merchandise from Dawson Suppliers
Olavssen Hardware regularly buys merchandise from Dawson Suppliers.
Olavssen uses the net method to record purchases and discounts.
On August 15, Olavssen Hardware purchased material from Dawson Suppliers.
The invoice received from Dawson showed an invoiced price of $15,536 and payment terms of 2/10, n/30.
The payment was sent to Dawson Suppliers on August 28.
Prepare entries to record the purchase and subsequent payment assuming a periodic inventory system.
(Note: Round to nearest dollar.)
Expert Solution
The journal entries are made below:
| Date | General Journal | Debit | Credit |
| August 15 | Inventory | $15,536 | |
| Accounts Payable | $15,225.28 | ||
| August 28 | Accounts Payable | $15,225.28 | |
| Cash | $15,225.28 | ||
| August 28 | Accounts Payayble | $15,225.28 | |
| Discount lost ($15,536 * 2%) | $310.72 | ||
| Cash | $15,536 | ||
| August 28 | Discount lost | $310.72 | |
| Accounts Payable | $310.72 |
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