On September 12, Vander Company sold merchandise in the amount of $6,200 to Jepson Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,200. Jepson uses the periodic inventory system and the gross method of accounting for purchases. Jepson pays the invoice on September 18, and takes the appropriate discount. The journal entry that Jepson makes on September 18 is:

Accounts Payable        $ 6200 Dr

Purchases Discounts                                     $  124 Cr

Cash                                                               $  6076 Cr

Explanation:

Periodic inventory system is one in which the entries are passed periodically after a specific length of time.

In the Books of Jepson

Periodic Inventory

Gross Method

Journal Entry

Particulars                          Debit                        Credit

Accounts Payable        $ 6200 Dr

Purchases Discounts                                     $  124 Cr

Cash                                                               $  6076 Cr

Discount within the first ten days will be of 2%

$ 6200 *2%= $124

Remaining amount 6200-124 = 6076 will be paid in cash.