Accounts Payable and Cash Discounts Instructions Dunbar Company sells electronics and on January 4, 2016, purchased 2,500 television sets at $800 each, on credit 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 Companys 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 Chart of Accounts CHART OF ACCOUNTS Dunbar Company General Ledger ASSETS 111 Cash 121 Accounts Receivable 141 Inventory 152 Prepaid Insurance 181 Equipment 189 Accumulated Depreciation LIABILITIES 211 Accounts Payable 231 Salaries Payable 250 Unearned Revenue 261 Income Taxes Payable EQUITY 311 Common Stock 331 Retained Earnings REVENUE 411 Sales Revenue EXPENSES 500 Cost of Goods Sold 501 Purchases Discounts Lost 511 Insurance Expense 512 Utilities Expense 521 Salaries Expense 532 Bad Debt Expense 540 Interest Expense 541 Depreciation Expense 559 Miscellaneous Expenses 910 Income Tax Expense General Journal Prepare the journal entries on Dunbar Companys books, assuming that it uses the net price method to record its merchandise (Dunbar uses a perpetual inventory system ) PAGE 9 GENERAL JOURNAL DATE ACCOUNT TITLE POST REF DEBIT CREDIT 1 2 3 4 5 6 7 Next Level Discuss the conceptual advantage of the net price method compared to the gross price method The method is theoretically superior to the method because it values the inventory and the related liability at the amount that the company expects to pay to acquire the goods

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Accounts Payable and Cash Discounts Instructions Dunbar Company sells electronics and on January 4, 2016, purchased 2,500 television sets at $800 each, on credit. Terms

Accounts Payable and Cash Discounts

Instructions

Dunbar Company sells electronics and on January 4, 2016, purchased 2,500 television sets at $800 each, on credit. 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 Companys 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.

Chart of Accounts

CHART OF ACCOUNTS

Dunbar Company

General Ledger

	ASSETS
111	Cash
121	Accounts Receivable
141	Inventory
152	Prepaid Insurance
181	Equipment
189	Accumulated Depreciation

	LIABILITIES
211	Accounts Payable
231	Salaries Payable
250	Unearned Revenue
261	Income Taxes Payable

	EQUITY
311	Common Stock
331	Retained Earnings

	REVENUE
411	Sales Revenue

	EXPENSES
500	Cost of Goods Sold
501	Purchases Discounts Lost
511	Insurance Expense
512	Utilities Expense
521	Salaries Expense
532	Bad Debt Expense
540	Interest Expense
541	Depreciation Expense
559	Miscellaneous Expenses
910	Income Tax Expense

General Journal

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

PAGE 9

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2
3
4
5
6
7

Next Level

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

The method is theoretically superior to the method because it values the inventory and the related liability at the amount that the company expects to pay to acquire the goods.