Asked by Chris Turner on Apr 30, 2024
Verified
Costner's Market recorded the following events involving a recent purchase of merchandise: Received goods for $40000 terms 2/10 n/30.
Returned $800 of the shipment for credit.
Paid $200 freight on the shipment.
Paid the invoice within the discount period.
As a result of these events the company's inventory
A) increased by $38416.
B) increased by $38612.
C) increased by $38616.
D) increased by $39400.
Freight
Costs associated with the transportation of goods, often recognized separately on financial documents for accounting purposes.
Discount Period
The time frame within which a payment can be made at a discounted rate from the total outstanding amount, incentivizing early payments.
Inventory
The goods or materials a business holds for the purpose of resale or production.
- Acquire knowledge of how to calculate the net cost of goods when settling payment within the allotted discount period.
Verified Answer
IK
Iroka kanonMay 06, 2024
Final Answer :
C
Explanation :
The net amount after the discount can be calculated as:
$40000 - ($40000 * 2%) = $39200
Then adding the freight of $200, the total cost is $39400
After returning $800 of merchandise, the final cost of the inventory is $38600
Therefore, the inventory increased by $38616 ($38600 + $16 credit for returned merchandise).
$40000 - ($40000 * 2%) = $39200
Then adding the freight of $200, the total cost is $39400
After returning $800 of merchandise, the final cost of the inventory is $38600
Therefore, the inventory increased by $38616 ($38600 + $16 credit for returned merchandise).
Learning Objectives
- Acquire knowledge of how to calculate the net cost of goods when settling payment within the allotted discount period.