On January 4, 2013, Dunbar Company purchased, on credit, 2,000 television sets at $500 each. Terms of the purchase were 2/10, n/30. Dunbar paid for 20% of these sets on January 13 and the remaining 80% on February 1.

Required:

1. Prepare the journal entries on Dunbar Company's books, assuming that it uses the net price method to record its merchandise. (Dunbar uses a perpetual inventory system.)

2. Next Level Discuss the conceptual advantage of the net price method compared to the gross price method.