Question

On December 28, 2021, Videotech Corporation (VTC) purchased 10 units of a new satellite uplink system from Tristar Communications for $27,000 each. The terms of each sale were 2/10, n/30. VTC uses the gross method to account for purchase discounts and a perpetual inventory system. VTC paid the net-of-discount amount on January 6, 2022.

Prepare the journal entries on December 28 and January 6 to record the purchase and payment. (If no entry is required for a transaction/event,

Answer 1

Note: The journal entry on December 28 and January 6 to record the purchase and payment is attached below.

A journal entry is a record of business transaction in an accounting book. A perfectly-documented journal entry includes date, credit and debit amount, unique reference number and transaction details.

A journal entry must include the following namely,

• Date of the transaction
• Amount to be debited and credited
• Account where the debits and credits are recorded - Personal, Real and Nominal accounts
• Name of the person making the entry
• Whether the entry on one-time or recurring
• Unique identifying number of the entry
• Description of the transaction

Steps in recording a journal entry:

Step 1 – Recording Accounting Journal Entries With Debits And Credits

Step 2 – Journalizing

Step 3 – Recording Journal Entries Using The Accounting Equation and Increase Or Decrease

Step 4 – Practice Recording Accounting Journal Entries