Question

1. During the month of June, Ace Incorporated purchased goods from two suppliers. The sequence of events was as follows:

June		3		Purchased goods for $3,800 from Diamond Inc. with terms 2/10, n/30.
		5		Returned goods costing $850 to Diamond Inc. for credit on account.
		6		Purchased goods from Club Corp. for $800 with terms 3/10, n/30.
		11		Paid the balance owed to Diamond Inc.
		22		Paid Club Corp. in full.

Required:

Assume that Ace uses a perpetual inventory system and that the company had no inventory on hand at the beginning of the month. Calculate the cost of inventory as of June 30. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Answer 1

Term 2/10 means, if company paid cash within 10 days, they will get a discount of 2%. under perpetual inventory system, discount amount will reduce from cost of inventory

June 3 Purchases	$ 3,800
Less: Return on June 5	$   (850)
Add: June 6 purchase	$     800
Less: Discount received ($3,800-$850)*2%)	$     (59)
Cost of inventory as of June 30	$ 3,691

You can reach me over comment box if you have any doubts. Please rate this answer