Question
In: Accounting
Buy Right Market recorded the following events involving a recent purchase of inventory: Received goods for...
Buy Right Market recorded the following events involving a
recent purchase of inventory:
Received goods for $120,000, terms 2/10, n/30.
Returned $2,400 of the shipment for credit.
Paid $600 freight on the shipment.
Paid the invoice within the discount period.
As a result of these events, the company's inventory
Select one:
a. increased by $115,248.
b. increased by $118,200.
c. increased by $115,836.
d. increased by $115,848.
Solutions
Expert Solution
| If find the answer useful please like the answer | |||||||
| Note: Purchase discount is not computed on the freight charges and purchase discount is also not computed on the purchase return amount | |||||||
| The correct answer is Option D $ 115,848 | |||||||
| Computation of purchase discounts | |||||||
| Particulars | Amount $ | ||||||
| Purchase Price | 120,000 | ||||||
| Less: Purchase Return and Allowances | 2,400 | ||||||
| Value of purchase eligible for discount | 117,600 | ||||||
| Less: Discounts (117,600'×2%=2,352) | 2,352 | ||||||
| Value of purchase after purchase discount | 115,248 | ||||||
| Freight | 600 | ||||||
| Value of Company's Inventory | 115,848 | ||||||
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