Lamprino Appliance uses a perpetual inventory system. The following are three recent merchan-dising transactions: June 10 Purchased 10 televisions from Mitsu Industries on account. Invoice price, $300 perunit, for a total of $3,000. The terms of purchase were 2/10, n/30.June 15 Sold one of these televisions for $450 cash.June 20 Paid the account payable to Mitsu Industries within the discount period.Instructionsa. Prepare journal entries to record these transactions assuming that Lamprino records purchasesof merchandise at:1. Net cost2. Gross invoice priceb. Assume that Lamprino did not pay Mitsu Industries within the discount period but insteadpaid the full invoice price on July 10. Prepare journal entries to record this payment assumingthat the original liability had been recorded at:1. Net cost2. Gross invoice pricec. Assume that you are evaluating the efficiency of Lamprino’s bill-paying procedures. Which accounting method—net cost or gross invoice price—provides you with the most useful infor-mation? Explain.
Lamprino Appliance uses a perpetual inventory system. The following are three recent merchan-
dising transactions:
June 10 Purchased 10 televisions from Mitsu Industries on account. Invoice price, $300 per
unit, for a total of $3,000. The terms of purchase were 2/10, n/30.
June 15 Sold one of these televisions for $450 cash.
June 20 Paid the account payable to Mitsu Industries within the discount period.
Instructions
a. Prepare
of merchandise at:
1. Net cost
2. Gross invoice price
b. Assume that Lamprino did not pay Mitsu Industries within the discount period but instead
paid the full invoice price on July 10. Prepare journal entries to record this payment assuming
that the original liability had been recorded at:
1. Net cost
2. Gross invoice price
c. Assume that you are evaluating the efficiency of Lamprino’s bill-paying procedures. Which
accounting method—net cost or gross invoice price—provides you with the most useful infor-
mation? Explain.
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