A firm that uses the perpetual inventory method purchased inventory for $2 000 from a vendor on credit, FOB shipping point, with terms of 2/10, n/30. The firm paid the shipper $100 cash for freight in. The firm then returned $200 of damaged goods and got an allowance from the vendor. The firm paid the vendor 8 days after the sale. Assuming this was the only transaction affecting inventory, and that there was no beginning balance, what is the overall cost of the inventory? All amounts include GST.
A)$1 694.55
B)$2 100.00
C)$1 764.00
D)$1 864.00

Question

Quizplus · Accepted Answer

The overall cost of the inventory is $1,694.55. This is calculated as follows:Purchase price: $2,000Less: Discount (2%): $40Less: Allowance for damaged goods: $200Plus: Freight in: $100Net cost: $1,694.55

A Firm That Uses the Perpetual Inventory Method Purchased Inventory