Question

5. David’s Bridals recorded the following events involving a recent purchase of merchandise: Received goods for $180,000, terms 2/10, n/30. Returned $2,500 of the shipment for credit. Paid $600 freight on the shipment. Paid the invoice within the discount period. What was the amount of the increase in inventory as a result of the events above?

Answer 1

Answer
Purchase cost	$                180,000
Less: Returns	-$                    2,500
Add: Freight paid	$                       600
Less: Discount ($180,000-$2,500)*2%)	-$                    3,550
Increase in company's merchandise inventory	$                174,550