Reference no: EM133152463

Question - Gross Method VS. Net Method - On January 1, 20x1. Entity A purchases inventory with a list price of P200,000 on account under credit terms of 20%, 10% trade discounts and is eligible to receive 5% cash discount if the amount is paid within 10 days; full payment must be made in 25 days. Entity A pays settles half of the invoice price on January 10, 20x1 and the remaining half on January 31, 20x1. The requirements for this problem is to prepare the journal entries under (a) gross method and (b) Net Method. And in this problem we will be using the periodic inventory system so expect that we will use purchases and purchase discount instead of inventory account.