CraneCorp. purchased merchandise during 2020 on credit for $845,000; terms3/10, n/30. All of the gross liability except $100,000was paid within the discount period. The remainder was paid within the 30-day term. At the end of the annual accounting period, December 31, 2020,90% of the merchandise had been sold and10% remained in inventory. The company uses a periodic system.

Assuming that the net method is used for recording purchases, prepare the entries for the purchase and two subsequent payments.(Credit account titles are automatically indented when the amount is entered.Do not indent manually.)

Account Titles and Explanation

Debit

Credit

(To record the purchase at net amount)

(To record payment within the discount period)

(To record the final payment.)

List of Accounts

What dollar amounts should be reported for the final inventory and cost of goods sold under the net method? Assume that there was no beginning inventory.

Amount ReportedFinal inventory

$Cost of goods sold

$

List of Accounts

What dollar amounts should be reported for the final inventory and cost of goods sold under the gross method? Assume that there was no beginning inventory.

1. Assuming that the $22,350discount is prorated between the cost of goods sold,90%, and the final inventory,10%.

Amount ReportedFinal inventory

$Cost of goods sold

$

2. Assuming that the $22,350discount is used to reduce cost of goods sold. Final inventory is carried at the gross amount.

Amount ReportedFinal inventory

$Cost of goods sold

$