Question

Assume Anderson’s General Store bought, on credit, a truckload of merchandise from American Wholesaling costing $23,000. If Anderson’s paid National Trucking $650 cash for transportation, immediately returned goods to American Wholesaling costing $1,200, and then paid American Wholesaling within the 2/30, n/60 purchase discount period. How much did this inventory cost Anderson’s? Assume Anderson’s uses a perpetual inventory system.

Answer 1

Answer:

$22,014

Explanation:

The computation of the cost of inventory is shown below:

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

=  $23,000 + $650 - $1,200 - $436

= $22,014

The discount is computed below:

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

= ($23,000 - $1,200) × 2%

= $436

We simply added the transportation cost and deducted the returned goods and discount to the purchase cost of merchandise