Schmidt Corp. purchases materials from a supplier that offers credit terms of 2/15, n/60. It purchased 16,500 of merchandise inventory from that supplier on Jan 20, 2019.

1. Assume that Schmidt Corp. paid the invoice on Feb. 1, 2019. Prepare journal entries to record the purchase of the inventory and the cash payment to the supplier using the net-of-discount method.
2. Assume that Schmidt Corp. paid the invoice on Feb. 15, 2019. Prepare journal entries to record the purchase of the inventory and the cash payment to the supplier using the net-of-discount method.
3. Compute the cost of a lost discount as an annual percentage rate.

Account	Debit	Credit
1.
2.