Hirsch Company buys inventory for $30,000 on terms of 1/10, n/30. It pays within the discount period. Required: 1. Prepare the journal entries to record the purchase and the payment under both the (a) gross price and (b) net price methods. Assume that Hirsch uses a periodic inventory system. 2. Prepare the journal entries to record the purchase and payment under both the (a) gross price and the (b) net price methods. Assume that Hirsch uses a perpetual inventory system. CHART OF ACCOUNTS Hirsch Company General Ledger ASSETS 111 Cash 121 Accounts Receivable 131 Inventory 142 Prepaid Insurance 181 Equipment 198 Accumulated Depreciation LIABILITIES 211 Accounts Payable 224 Interest Payable 231 Salaries Payable 241 Accrued Loss on Purchase Commitment EQUITY 311 Common Stock 331 Retained Earnings REVENUE 411 Sales Revenue EXPENSES 500 Cost of Goods Sold 510 Purchases 511 Purchase Returns and Allowances 512 Purchase Discounts Taken 513 Purchase Discounts Lost 514 Loss on Purchase Commitment 515 Recovery of Accrued Loss on Purchase Commitment 521 Salaries Expense 525 Interest Expense 532 Bad debt Expense 534 Insurance Expense 536 Utilities Expense 539 Miscellaneous Expenses 1a. Prepare the journal entries to record the purchase on March 14 and the payment on March 22 under the gross price method assuming a periodic inventory system. PAGE 1 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 2 3 4 5 1b. Prepare the journal entries to record the purchase on March 14 and the payment on March 22 under the net price method assuming a periodic inventory system. PAGE 1 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 2 3 4 2a. Prepare the journal entries to record the purchase on March 14 and the payment on March 22 under the gross price method assuming a perpetual inventory system. PAGE 1 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 2 3 4 5 2b. Prepare the journal entries to record the purchase on March 14 and the payment on March 22 under the net price method assuming a perpetual inventory system. PAGE 1 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 2 3 4

Hirsch Company buys inventory for $30,000 on terms of 1/10, n/30. It pays within the discount period. Required: 1. Prepare the journal entries to record the purchase and the payment under both the (a) gross price and (b) net price methods. Assume that Hirsch uses a periodic inventory system. 2. Prepare the journal entries to record the purchase and payment under both the (a) gross price and the (b) net price methods. Assume that Hirsch uses a perpetual inventory system. CHART OF ACCOUNTS Hirsch Company General Ledger ASSETS 111 Cash 121 Accounts Receivable 131 Inventory 142 Prepaid Insurance 181 Equipment 198 Accumulated Depreciation LIABILITIES 211 Accounts Payable 224 Interest Payable 231 Salaries Payable 241 Accrued Loss on Purchase Commitment EQUITY 311 Common Stock 331 Retained Earnings REVENUE 411 Sales Revenue EXPENSES 500 Cost of Goods Sold 510 Purchases 511 Purchase Returns and Allowances 512 Purchase Discounts Taken 513 Purchase Discounts Lost 514 Loss on Purchase Commitment 515 Recovery of Accrued Loss on Purchase Commitment 521 Salaries Expense 525 Interest Expense 532 Bad debt Expense 534 Insurance Expense 536 Utilities Expense 539 Miscellaneous Expenses 1a. Prepare the journal entries to record the purchase on March 14 and the payment on March 22 under the gross price method assuming a periodic inventory system. PAGE 1 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 2 3 4 5 1b. Prepare the journal entries to record the purchase on March 14 and the payment on March 22 under the net price method assuming a periodic inventory system. PAGE 1 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 2 3 4 2a. Prepare the journal entries to record the purchase on March 14 and the payment on March 22 under the gross price method assuming a perpetual inventory system. PAGE 1 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 2 3 4 5 2b. Prepare the journal entries to record the purchase on March 14 and the payment on March 22 under the net price method assuming a perpetual inventory system. PAGE 1 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 2 3 4

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Hirsch Company buys inventory for $30,000 on terms of 1/10, n/30. It pays within the discount period.

	Required:
1.	Prepare the journal entries to record the purchase and the payment under both the (a) gross price and (b) net price methods. Assume that Hirsch uses a periodic inventory system.
2.	Prepare the journal entries to record the purchase and payment under both the (a) gross price and the (b) net price methods. Assume that Hirsch uses a perpetual inventory system.

CHART OF ACCOUNTS

Hirsch Company

General Ledger

	ASSETS
111	Cash
121	Accounts Receivable
131	Inventory
142	Prepaid Insurance
181	Equipment
198	Accumulated Depreciation

	LIABILITIES
211	Accounts Payable
224	Interest Payable
231	Salaries Payable
241	Accrued Loss on Purchase Commitment

	EQUITY
311	Common Stock
331	Retained Earnings

	REVENUE
411	Sales Revenue

	EXPENSES
500	Cost of Goods Sold
510	Purchases
511	Purchase Returns and Allowances
512	Purchase Discounts Taken
513	Purchase Discounts Lost
514	Loss on Purchase Commitment
515	Recovery of Accrued Loss on Purchase Commitment
521	Salaries Expense
525	Interest Expense
532	Bad debt Expense
534	Insurance Expense
536	Utilities Expense
539	Miscellaneous Expenses

1a. Prepare the journal entries to record the purchase on March 14 and the payment on March 22 under the gross price method assuming a periodic inventory system.

PAGE 1

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2
3
4
5

1b. Prepare the journal entries to record the purchase on March 14 and the payment on March 22 under the net price method assuming a periodic inventory system.

PAGE 1

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2
3
4

2a. Prepare the journal entries to record the purchase on March 14 and the payment on March 22 under the gross price method assuming a perpetual inventory system.

PAGE 1

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2
3
4
5

2b. Prepare the journal entries to record the purchase on March 14 and the payment on March 22 under the net price method assuming a perpetual inventory system.

PAGE 1

GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2
3
4

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