Castro industries purchased 21600 of merchandise on

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Castro Industries purchased $21,600 of merchandise on February 1, 2014, subject to a trade discount of 5% and with credit terms of 2/15, n/60. It returned $5,000 (gross price before trade or cash discount) on February 4. The invoice was paid on February 13.

Instructions

(a) Assuming that Castro uses the perpetual method for recording merchandise transactions, record the purchase, return, and payment using the gross method.

(b) Assuming that Castro uses the periodic method for recording merchandise transactions, record the purchase, return, and payment using the gross method.

(c) At what amount would the purchase on February 1 be recorded if the net method were used?

Reference no: EM13392692

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