Buyer/Seller Entries: Net Method (Perpetual)

Merchandising companies have a plethora of additional, challenging considerations for transactions involving buyers and sellers.

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Net Method vs. Gross Method

It is important to be aware of what method your textbook is using to teach buyer/seller entries. If the buyer and seller do not take the discount rate into consideration until the date of payment, then you are using the gross method. If the discount is taken into consideration immediately on the date of payment, you are using the net method.

If you want to review the net method for buyer/seller entries, please see the Buyer/Seller Entries: Gross Method lesson.

Credit Terms

For many of these buyer/seller entry problems, the purchase/sale will be on account and will include credit terms. These credit terms are generally presented in a specific format, as seen below.

The credit terms pictured above means that the buyer will receive a 2% discount if they pay within 10 days. The definitive due date is in 30 days. Therefore, if the buyer pays on days 1-10, they will get 2% off of the price, but if they pay on days 11-30, they will pay full price.