Instructions Nelson Company bought inventory for $56,000 on terms of 2/15, n/60. It pays for the first $42,000 of inventory purchased within the discount period and pays for the remaining $14,000 two months later. 1. Prepare the journal entries to record the purchase and the payment under both the (a) gross price and (b) net price methods. Assume that Nelson uses the periodic inventory system. 2. Next Level Which of the two methods yields a conceptually preferable valuation of inventory? General Journal X Chart of Accounts 1a. Prepare the journal entries to record the purchase of inventory on May 18, the partial payment on account on May 28, and the payment of the balance on July 17. Assume that Nelson uses the gross price method and a periodic inventory system. General Journal Instructions 2 3 4 5 6 7 GENERAL JOURNAL DATE ACCOUNT TITLE CHART OF ACCOUNTS ASSETS 111 Cash PAGE 1 POST. REF. DEBIT CREDIT 1b. Prepare the journal entries to record the purchase of inventory on May 18, the partial payment on account on May 28, and the payment of the balance on July 17. Assume that Nelson uses the net price method and a periodic inventory system. General Journal Instructions GENERAL JOURNAL DATE ACCOUNT TITLE 1 2 3 4 5 6 Next Level PAGE 1 POST. REF DEBIT CREDIT X Nelson Company 121 Accounts Receivable General Ledger 131 Inventory 142 Prepaid Insurance 181 Equipment 198 Accumulated Depreciation LIABILITIES 211 Accounts Payable 231 Salaries Payable 241 Accrued Loss on Purchase Commitment 251 Unearned Revenue 261 Income Taxes Payable EQUITY 311 Common Stock 331 Retained Earnings REVENUE 411 Sales Revenue EXPENSES 500 Cost of Goods Sold 510 Purchases 511 Purchase Returns and Allowances 512 Purchase Discounts Taken 513 Purchase Discounts Lost 514 Loss on Purchase Commitment 515 Recovery of Accrued Loss on Purchase Commitment 521 Salaries Expense 525 Interest Expense 532 Bad debt Expense 534 Insurance Expense 536 Utilities Expense 541 Depreciation Expense 559 Miscellaneous Expenses 910 Income Tax 2. Which of the two methods yields a conceptually preferable valuation of inventory? Expense