On July 15,2009, the Nixon Car Company purchased 1,000 tires from the Harwell Company for $50 each. The terms for the sale were 2/10, n/30. Nixon uses a periodic inventory system and the net method of accounting for purchase discounts.

1. prepare the journal entries to record the purchase on July 15 and payments on July 23, 2009.

2. Prepare the journal entry to record the payment on August 15, 2009.

3. If Nixon instead uses a perpetual inventory system, explain any charges to the journal entries created in requirements 1 and 2.

1. Journal entries to record the purchase on July 15, 2009:

Debit: Inventory - Tires $50,000
Credit: Accounts Payable $50,000

(To record the purchase of 1,000 tires from Harwell Company)

Journal entries to record the payment on July 23, 2009:

Debit: Accounts Payable $50,000
Credit: Cash $50,000

(To record the payment for the purchase of 1,000 tires)

2. Journal entry to record the payment on August 15, 2009:

Debit: Accounts Payable $50,000
Credit: Cash $50,000

(To record the payment for the outstanding balance on the purchase)

3. If Nixon instead uses a perpetual inventory system, there would be additional journal entries required to adjust the inventory account. In the periodic system, inventory is not updated until the end of the period, while in the perpetual system, inventory is updated in real-time with every purchase or sale. Therefore, the charges would be as follows:

Journal entries for requirement 1:

Debit: Inventory - Tires $50,000
Credit: Accounts Payable $50,000

(To record the purchase of 1,000 tires from Harwell Company)

Debit: Accounts Payable $50,000
Credit: Inventory - Tires $50,000

(To adjust the inventory account)

Journal entries for requirement 2:

Debit: Accounts Payable $50,000
Debit: Inventory - Tires $50,000
Credit: Cash $100,000

(To record the payment for the purchase and adjust the inventory account)

1. Journal entries to record the purchase on July 15 and payment on July 23, 2009:

July 15, 2009:
Debit: Inventory - Tires ($50,000)
Credit: Accounts Payable ($50,000)
(To record the purchase of 1,000 tires from Harwell Company)

July 23, 2009:
Debit: Accounts Payable ($49,000)
Debit: Purchase Discounts ($1,000)
Credit: Cash ($48,000)
(To record the payment made within the discount period - 2% of $50,000 is $1,000, resulting in a net payment of $49,000)

2. Journal entry to record the payment on August 15, 2009:

August 15, 2009:
Debit: Accounts Payable ($50,000)
Credit: Cash ($50,000)
(To record the full payment made after the discount period, with no purchase discounts)

3. If Nixon instead uses a perpetual inventory system, there would be no changes to the journal entries recorded in requirements 1 and 2. The perpetual inventory system continuously updates the inventory balance by recording the cost of goods sold at the time of each sale. Therefore, the purchase of tires and the subsequent payments would still be recorded in the same way.

To answer these questions, we need to understand the concepts of journal entries, purchase discounts, periodic and perpetual inventory systems, and payment terms.

1. To record the purchase on July 15, 2009, we will debit the "Inventory" account and credit the "Accounts Payable" account. The journal entry will look like this:

Date: July 15, 2009
Account Debit Credit
----------------------------------------------
Inventory 50,000
Accounts Payable 50,000

To record the payment on July 23, 2009, we will first calculate the purchase discount available. The terms of the sale are 2/10, n/30, which means the payer can take a 2% discount if paid within 10 days; otherwise, the full amount is due within 30 days. The discount available is 2% of $50, which is $1 per tire. Hence, the total discount available is $1,000. If the payment is made within the discount period, the following journal entry is made:

Date: July 23, 2009
Account Debit Credit
--------------------------------------------------
Accounts Payable 49,000
Cash 49,000

2. To record the payment on August 15, 2009, we assume it was not made within the discount period. Hence, there will be no purchase discount available. The following journal entry is made:

Date: August 15, 2009
Account Debit Credit
--------------------------------------------------
Accounts Payable 50,000
Cash 50,000

3. If Nixon instead uses a perpetual inventory system, the journal entries in requirements 1 and 2 will remain the same. However, additional entries will be made to update the inventory balance. In a perpetual inventory system, the inventory account is adjusted for each purchase transaction. The cost of each tire will be recorded separately. Therefore, the following adjustment will be made to the entries:

In the purchase journal entry:
Date: July 15, 2009
Account Debit Credit
---------------------------------------------------------
Inventory (1,000 tires) 50,000

In the payment journal entry (when payment is made within the discount period):
Date: July 23, 2009
Account Debit Credit
----------------------------------------------------
Accounts Payable 49,000
Cash 49,000

To summarize, if Nixon uses a perpetual inventory system, the journal entries will include separate entries to record the cost of each tire and adjust the inventory accordingly in addition to the regular journal entries for purchases and payments.