Stan's Market recorded the following events involving a recent purchase of inventory: Received goods for $120,000, terms 2/10, n/30.
Returned $2,400 of the shipment for credit.
Paid $600 freight on the shipment.
Paid the invoice within the discount period.
As a result of these events, the company's inventory
A)increased by $115,248.
B)increased by $118,200.
C)increased by $115,836.
D)increased by $115,848.

Question

Quizplus · Accepted Answer

The company paid the invoice within the discount period, so it gets a 2% discount. The amount of the discount is $120,000 * 2% = $2,400. The company also paid $600 for freight, so the total cost of the inventory is $120,000 + $600 - $2,400 = $118,200. The company returned $2,400 of the shipment for credit, so the net increase in inventory is $118,200 - $2,400 = $115,800.

Stan's Market Recorded the Following Events Involving a Recent Purchase