Problem 8-3 (Essay) Some of the transactions of Torres Company during August are listed below. Torres uses the periodic inventory method. August 10 Purchased merchandise on account, $12,000, terms 2/10, n/30. 13 Returned part of the purchase of August 10, $1,200, and received credit on account. 15 Purchased merchandise on account, $16,000, terms 1/10, n/60 25 Purchased merchandise on account, $20,000, terms 2/10, n/30. 28 Paid invoice of August 15 in full. Assuming that purchases are recorded at gross amounts and that discounts are to be recorded when taken: Describe how the various items would be shown in the financial statements Assuming that purchases are recorded at net amounts and that discounts lost are treated as financial expenses: Describe how the various items would be shown in the financial statements. Which of the two methods do you prefer and why