Exhibit 7-1
Edwards Co. purchased raw materials with a cost of $95,000 on March 2, 2015. Credit terms of 3/20, n/60 applied. Edwards paid for the purchase on March 18, 2015. Calculate the amount at which Edwards would record the inventory on March 2, 2015, the date of purchase, using the method given.
-Refer to Exhibit 7-1. Edwards uses a perpetual inventory system and the gross price method.
A) $42,000
B) $76,000
C) $92,150
D) $95,000

Question

Quizplus · Accepted Answer

Under the gross price method, inventory is recorded at its full purchase price without deducting any cash discounts. Therefore, Edwards would record the inventory at the full purchase price of $95,000 on March 2, 2015.

Exhibit 7-1 Edwards Co. Purchased Raw Materials with a Cost of $95,000