$E8\mathrm{.}7B(LO2)(Purchases$ Recorded Net Periodic Method$)$ Presented below are transactions related $to$ Jennings, Inc.

May $10$ Purchased goods billed $at$ $$20,000$ subject $to$ cash discount terms $of\frac{2}{10},\frac{n}{60}.$

$11$ Purchased goods billed $at$ $$18,200$ subject $to$ terms $of\frac{1}{15},\frac{n}{30}.$

$19$ Paid invoice $of$ May $10.$

$24$ Purchased goods billed $at$ $$16,500$ subject $to$ cash discount terms $of\frac{2}{10},\frac{n}{30}.$

Instructions

$(a)$ Prepare general journal entries for the transactions above under the assumption that purchases are $tobe$ recorded $at$

net amounts after cash discounts and that discounts lost are $tobe$ treated $as$ financial expense.

$(b)$ Assuming $no$ purchase $or$ payment transactions other than those given above, prepare the adjusting entry required $on$

May $31if$ financial statements are $tobe$ prepared $asof$ that date.

$E8\mathrm{.}8B(LO2)(Purchases$ Recorded, Gross Method$)$ Castro Industries purchased $$21,600of$ merchandise $on$ February $1,2020,$

subject $to$ a trade discount $of5\%$ and with credit terms $of\frac{2}{15},\frac{n}{60}.It$ returned $$5,000(gross$ price before trade $or$ cash dis$-$

count$)on$ 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 $1be$ recorded $if$ the net method were used?