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Prepare the journal entries to record the purchase

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Question - Discounts - Nelson Company bought inventory for $50,000 on terms of 2/15, [1/60. It pays for the first $37,500 l0 7.4 of inventory purchased within the discount period and pays for the remaining $12,500 two months later.

Required -

1. Prepare the journal entries to record the purchase and the payment under both the (a) gross price and (b) net m price methods. Assume that Nelson uses the periodic inventory system.

2. Next Level Which of the two methods yields a conceptually preferable valuation of inventory?

Reference no: EM133144517

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