You may have shopped at a Billy’s store. Suppose Billy’s purchased T-shirts on January 1 on account for $15,900. Credit terms are 2/15, n/30. Billy’s paid within the discount period on January 8. Billy’s sold the goods on February 5.
Requirements
1. If Billy’s uses a periodic inventory system, in which month will the purchase of inventory be recorded as an expense? How much will the net expense be?
2. If Billy’s uses the perpetual inventory system, in which month will the purchase of inventory be recorded as an expense? How much will the net expense be?