Question

Stan's Market recorded the following events involving a recent purchase of merchandise: Received goods for $20,000, terms 2/10, n/30. Returned $400 of the shipment for credit. Paid $100 freight on the shipment. Paid the invoice within the discount period. As a result of these events, the company's merchandise inventory Question 33 options: 1) increased by $19,306. 2) increased by $19,700. 3) increased by $19,308. 4) increased by $19,208.

Answer 1

Answer:

4) increased by $19,208

Explanation:

Net inventory purchased = Purchase - Purchase return = $20,000 - $400 = $19,600

Payment of freight made outward for purchase return is not part of inventory thus $100 freight ignored.

Now terms of purchase provide 2% discount if payment made within 10 days, and total credit period = 30 days.

Given payment made within discount period thus discount availed =

$19,600 X 2% = $392

Net value of inventory = $19,600 - $392 (Discount Availed) = $19,208

On the whole inventory will increase with this value.

Correct option is 4) increased by $19,208