E8-8 (Purchases Recorded, Gross Method) Cruise Industries purchased $10,800 of merchandise on
February 1, 2014, subject to a trade discount of 10% and with credit terms of 3/15, n/60. It returned $2,500
(gross price before trade or cash discount) on February 4. The invoice was paid on February 13.

Instructions:

(a) Assuming that Cruise uses the perpetual method for recording merchandise transactions, record
the purchase, return, and payment using the gross method.

(b) Assuming that Cruise 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 1 be recorded if the net method were used?

A. economic resources to be used or turned into cash within one year. b. reports assets, liabilities, and stockholders' equity. c. decrease assets; increase liabilities and stockholders' equity. d. increase assets; decrease liabilities and stockholders' equity. e. an exchange or event that has a direct and measurable financial effect. f. accounts for a business separate from its owners. g. the principle that assets should be recorded at their original cost to the company. h. a standardized format used to accumulate data about each item reported on financial statements. i. the basic accounting equation. j. the two equalities in accounting that aid in providing accuracy. k. the account credited when money is borrowed from a bank using a promissory note. l. cumulative earnings of a company that have not yet been distributed to the owners. m. every transaction has at least two effects. n. amounts presently owed by the business. transaction, separate entity assumption, balance sheet, liabilities, assets, current assets, notes payable, duality of effects, retained earnings, debit.