Reference no: EM132534704

Dunbar Company sells electronics and on January 4, 2016, purchased 2,500 television sets at $800 each, on credit. Terms of the purchase were 2/10, n/30. Dunbar paid for 20% of these sets on January 13 and the remaining 80% on February 1.

Required:

Question 1. Prepare the journal entries on Dunbar Company's books, assuming that it uses the net price method to record its merchandise. (Dunbar uses a perpetual inventory system.)

Question 2. Next Level Discuss the conceptual advantage of the net price method compared to the gross price method.

CHART OF ACCOUNTS

Dunbar Company

General Ledger

ASSETS

111Cash

121Accounts Receivable

141Inventory

152Prepaid Insurance

181Equipment

189Accumulated Depreciation

LIABILITIES

211Accounts Payable

231Salaries Payable

250Unearned Revenue

261Income Taxes Payable

EQUITY

311Common Stock

331Retained Earnings

REVENUE

411Sales Revenue

EXPENSES

500Cost of Goods Sold

501Purchases Discounts Lost

511Insurance Expense

512Utilities Expense

521Salaries Expense

532Bad Debt Expense

540Interest Expense

541Depreciation Expense

559Miscellaneous Expenses

910Income Tax Expense