Asked by Nicholas Bermudez on Jun 27, 2024
Verified
Phillips Corp.purchased raw materials with a catalog price of $60, 000.Credit terms of 3/15, n/60 apply.If Phillips uses the net price method, the purchase should be recorded at
A) $61, 800
B) $60, 000
C) $58, 200
D) $51, 000
Net Price Method
An accounting method that records purchases at the net price, after deducting any discounts, rather than recording them at the gross price.
Catalog Price
The listed price of goods or services in a catalog, before any discounts or adjustments.
- Ascertain the expense of acquiring inventory and the impact of payment conditions on the documentation of inventory costs.
Verified Answer
KS
Kunal SinghalJul 01, 2024
Final Answer :
C
Explanation :
The net price method takes the catalog price and subtracts the discount. In this case, the discount is 3% of the catalog price, or $1,800. Therefore, the purchase should be recorded at $58,200 ($60,000 - $1,800).
Learning Objectives
- Ascertain the expense of acquiring inventory and the impact of payment conditions on the documentation of inventory costs.