Pb$6\mathrm{.}4$B PROBLEM $6\mathrm{.}4$B Comparison of Net Cost and Gross Price Methods LO$6-3,$ LO$6-6$

Mary's TV uses a perpetual inventory system. The following are three recent merchandising transactions.

Mar. $6$ Purchased eight TVs from Whosa Industries on account. Invoice price, $$3500$ per unit, for a total of $$28,000.$ The terms of purchase were $\frac{2}{10},\frac{n}{30}.$

Mar. $11$ Sold two of these televisions for $$6,000$ cash.

Mar. $16$ Paid the account payable to Whosa Industries within the discount period.

Instructions

a$.$ Prepare journal entries to record these transactions assuming that Mary's records purchases of merchandise at

Net cost

Gross invoice price

b$.$ Assume that Mary's did not pay Whosa Industries within the discount period but instead paid the full invoice price on April $6.$ Prepare journal entries to record this payment assuming that the original liability had been recorded at

Net cost

Gross invoice price

c$.$ Assume that you are evaluating the efficiency of Mary's bill$-$paying procedures. Which accounting method$-$net cost or gross invoice price$-$provides you with the most useful information? Explain.

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