Question

country cupboard purchased inventory for 5500 and also paid a 360 freight bill. Country cupboard returned 45% of the goods to the seller and later took a 3% purchase discount. Assume country cupboard uses a perpetual inventory system. what is country cupboard's final cost of the inventory that it kept

Answer 1

Answer:

$3,475.75

Explanation:

the journal entries required to record the purchases are:

Dr Inventory 5,500

    Cr Accounts payable 5,500

Dr Inventory 360

    Cr Cash 360

Dr Accounts payable 2,475

    Cr Inventory 2,475

Dr Accounts payable 3,025

    Cr Cash 2,934.25

    Cr Purchase discounts 90.75

Cost of inventory = $5,500 + $360 - $2,475 - $90.75 = $3,475.75