Serafina Corp. purchases inventory costing $4,000 on July 11 on terms 3/10, n/30, and pays the invoice in full on July 15.
(a) Prepare the required entries to record the two transactions assuming Serafina uses
(1) The gross method of recording purchases, and
(2) The net method of recording purchases. Assume the periodic method is used.
(b) Journalize the two transactions under
(1) The gross method and
(2) The net method,
Assuming the invoice was paid on July 31 instead of July 15.
(c) Assuming that Serafina is a private company reporting under ASPE, can interest costs incurred to finance inventory be added to the cost of the inventory?
(d) Assuming that Serafina is a public company following IFRS, under what circumstances can interest costs incurred to finance inventory be added to the cost of the inventory?