On 1 February 20X2, Quintal, a boiler manufacturer, buys copper tubes. The supplier offers a price of 120,000 on its normal credit terms, or a settlement of 126,000 on 31 October 20X2, the option chosen by Quintal, which effectively contains a financing element. Quintal pays a carrier 2,400 in cash to deliver the tubes to its factory. The reporting period ends on 31 December 20X2. Ignoring VAT and the settlement of the supplier, record the entry for the receipt into inventory and the entry for the interest expense of the period.
- Price for normal credit terms
- 120,000
- Amount payable on 31 October 20X2
- 126,000
- Transport paid in cash
- 2,400