Question

1. Jackson purchased $ 550 of goods and received credit terms of 5​/15​, ​n/30. How much did he pay if payment was made during the discount​ period? (Round any intermediate calculations to the nearest​ cent, and your final answer to the nearest​ dollar.)

A. $ 523

B. $ 550

C. $ 578

D. $ 468

2. Jemco bought goods for $ 340 on credit. Jemco returned $ 30 worth of goods. Terms of the sale were 3​/10, ​n/30. If Jemco pays the amount owed within the discount​period, what is the amount they should​ pay? (Round any intermediate calculations to the nearest​ cent, and your final answer to the nearest​ dollar.)

A. $ 340

B. $ 301

C. $ 319

D. $ 310

3. On November​ 30, Janoch's Dog Kennel purchased $1,100 of merchandise on account from the Ganster Company. The goods were shipped F.O.B. shipping point. The freight charge of $80 was paid by Ganster Company and added to the invoice. The amount to record in the Purchases account​ is:

A. $1,010.

B. $1,180.

C. $1,100.

D. $1,020.

Answer 1

1. Jackson purchased $ 550 of goods and received credit terms of 5 /15 , n/30. How much did he pay if payment was made during the discount period?

In the given scenario the payment term is 5/15, n/30. Which means, 5% discount over total purchase value if pays within 15 days which is called discount period. Otherwise, need to pay the full amount with in 30 days.

In the given question the payment is taking place in within the discounted period, so the buyer will get a 5% discount on purchase price.

Purchase price = $ 550

Discount % - 5%

Discount Value = 550 X 5%

                        = $ 27.50

Payment Amount = Purchase Price – Discount Value

                             = 550 – 27.50

                             = 522.50

Rounded to nearest dollar = $523

So the right answer is Option A. $523

2. Jemco bought goods for $ 340 on credit. Jemco returned $ 30 worth of goods. Terms of the sale were 3 /10, n/30. If Jemco pays the amount owed within the discount period, what is the amount they should pay?

In the given scenario the payment term is 3/10, n/30. Which means, 3% discount over total Net purchase value ( Purchase – Return) if pays within 10 days which is called discount period. Otherwise need to pay the full amount within 30 days.

In the given question the payment is taking place in within the discounted period, so the buyer will get a 3% discount on net purchase price.

Purchase price = $ 340

Purchase Return = $ 30

Net Purchase Amount = 340-30 = 310

Discount % - 3%

Discount Value = 310 X 3%

                        = $ 9.30

Payment Amount = Net Purchase – Discount Value

                             = 310 – 9.30

                             = 300.70

Rounded to nearest dollar = $301

So the right answer is Option B. $301

3. On November 30, Janoch's Dog Kennel purchased $1,100 of merchandise on account from the Ganster Company. The goods were shipped F.O.B. shipping point. The freight charge of $80 was paid by Ganster Company and added to the invoice. The amount to record in the Purchases account is:

FOB Shipping point means the buyer is responsible for the bearing the shipping cost. The buyer will be bearing and recording the expense in his books. The freight charges will be added to the cost of goods purchased as the accounting practice says all the direct expenses associated to bring the good in the warehouse should be added to the cost of inventory.

So in the journal entry, the cost of inventory should include $80. So the total amount recorded to the Purchase Account should be 1100+80 = $1180

The Option B is the right answer.