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Accounting for Inventory at Cost . Purchase discounts have a gross and net method. Example: Assume you purchase $10,000 in inventory and there is a 2% discount if you pay within 30 days. . GROSS METHOD Purchases/Inventory A/P 10,000 NET METHOD Purchases/Inv. A/P 9,800 10,000 9,800 A/P Pay during discount period: A/P 10,000 Purchase Discounts (-Expense) Cash Pay during discount period: 9,800 Cash 9,800 200 9,800 Pay after discount period: A/P 10,000 Cash Pay After discount period: AVP 9,800 Interest Expense 200 Cash 10,000 10,000