Question

E6-9 Reporting Purchases, Purchase Discounts, and Purchase Returns Using a Perpetual Inventory System [LO 6-3] During the month of June, Ace Incorporated purchased goods from two suppliers. The sequence of events was as follows: June 3 Purchased goods for $4,100 from Diamond Inc. with terms 2/10, n/30. 5 Returned goods costing $1,100 to Diamond Inc. for full credit. 6 Purchased goods from Club Corp. for $1,000 with terms 2/10, n/30. 11 Paid the balance owed to Diamond Inc. 22 Paid Club Corp. in full. Required: Assume that Ace uses a perpetual inventory system and that the company had no inventory on hand at the beginning of the month. Calculate the cost of inventory as of June 30.

Answer 1

Answer:

Ace Incorporated

The cost of inventory as of June 30 is:

= $4,000.

Explanation:

a) Data and Calculations:

June 1  Beginning Inventory        $0

June 3 Purchased goods for      $4,100

June 5 Returned goods costing($1,100)

June 6 Purchased goods for     $1,000

June 30 Total available             $4,000

b) The cost of inventory is made up of the cost of purchasing the inventory minus purchase returns.  In this instance, there were no sales during June.  This would have reduced the cost of the inventory available as of June 30.