Question

Assume Anderson’s General Store bought, on credit, a truckload of merchandise from American Wholesaling costing $24,700. If Anderson’s paid National Trucking $820 cash for transportation, immediately returned goods to American Wholesaling costing $1,100, and then paid American Wholesaling within the 1/30, n/60 purchase discount period. How much did this inventory cost Anderson’s? Assume Anderson’s uses a perpetual inventory system.

Answer 1

Answer:

The cost of inventory is $24,184

Explanation:

The computation of the inventory cost is shown below:

= Purchase cost of merchandise - returned goods - discount + transportation

= $24,700 - $1,100 - $236 + $820

= $24,184

The calculation of the discount is shown below:

= (Purchase cost of merchandise - returned goods) × discount rate

= ($24,700 - $1,100) × 1%

= $236