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The general ledger of Ace company shows the following data: invoice cost of purchase 188,000, purchase...

The general ledger of Ace company shows the following data: invoice cost of purchase 188,000, purchase discount received, 10,000, purchase returns and allowances, 4,000. Merchandise inventory beg, 18,000. Total cost of merchandise purchases, 182,800, merchandise inventory end, 10,800. The cost of goods sold is 190,000. How much is the freight in?

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Answer #1

Cost of Goods Sold = Opening Inventory + Net Purchases - Closing Inventory

Cost of Goods Sold = $ 190,000

Opening Inventory = $ 18,000

Closing Inventory = $ 10,800

190,000 = 18,000 + Net Purchases - 10,800

Net Purchases = 190,000 + 10,800 - 18,000

Net Purchases = $ 182,800

Net Purchases = Purchases - Purchase Discount Received - Purchase Returns and Allowances + Freight In

Purchase Discount Received = $ 10,000

Purchase Return and Allowances = $ 4,000

Purchases = $ 188,000

Net Purchases = $ 182,800

182,800 = 188,000 - 10,000 - 4,000 + Freight In

182,800 = 174,000 + Freight In

Freight In = 182,800 - 174,000

Freight In = $ 8,800

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