Recording Cash Discounts Schrand Corporation purchases materials from a supplier that offers credit terms of 2/15, n/60. It purchased $12,500 of merchandise inventory from that supplier on January 20, 2014. Required a. Assume that Schrand Corporation paid the invoice on February 15, 2014. Prepare journal entries to record the purchase of this inventory and the cash payment to the supplier using the net-of-discount method.

General Journal
	Description	Debit	Credit
1/20	Options:Interest expense-discounts lost, Accounts payable, Inventory, Cash	Answer?	Answer?
	Options:Accounts payable, Interest expense-discounts lost, Inventory, Cash	Answer?	Answer?
2/15	Options: Accounts payable, Cash, Inventory, Interest expense-discounts lost,	Answer?	Answer?
	Interest expense-discounts lost	Answer?	Answer?
	Options: Accounts payable, Inventory, Interest expense-discounts lost, Cash	Answer?	Answer?

b. Set up the necessary T-accounts and post the journal entries from question a to the accounts.

Cash (A)
1/20	Answer?	Answer?
2/15	Answer?	Answer?

Accounts Payable (L)
1/20	Answer?	Answer?
2/15	Answer?	Answer?

Inventory (A)
1/20	Answer?	Answer?
2/15	Answer?	Answer?

Interest Expense-Discounts Lost (E)
1/20	Answer?	Answer?
2/15	Answer?	Answer?

c. Compute the cost of a lost discount as an annual percentage rate. Round your answer to one decimal place. Answer?%