Transactions follow for Whitehall Limited:
March 10 Purchased goods billed at $25,000, terms 3/10, n/60.
11 Purchased goods billed at $26,575, terms 1115, n/30.
19 Paid invoice of March 10.
24 Purchased goods billed at $11,500, terms 3/10, n/30.
Instructions
(a) Prepare general journal entries for the transactions above, assuming that purchases are to be recorded at net amounts after cash discounts and that discounts lost are to be treated as a financial expense. Assume a periodic inventory system.
(b) Assuming there are no purchase or payment transactions other than the ones mentioned above, prepare the adjusting entry required on March 31 if financial statements are to be prepared as at that date.
(c) Prepare general journal entries for the transactions above, assuming that purchases are to be recorded using the gross method. Assume a periodic inventory system.
(d) Indicate whether there are entries required at March 31 in addition to those in (c) if financial statements are to be prepared. Explain.
(e) Which method would provide the general manager of Whitehall with better information for managing the business?