On July 1, 2010, Do-It-Yourself Warehouse purchased 100 barbeque pits at $75 each from Blazing Inferno B-B-Q. Shipping terms are FOB shipping point. Total delivery charges are $5 per barbeque pit. Do-It-Yourself's inventory account balance should be increased by what amount as a direct result of this purchase?

Question

Quizplus · Accepted Answer

The inventory account should be increased by the cost of the barbeque pits plus the delivery charges. The cost is 100 pits x $75 = $7,500, and the delivery charges are 100 pits x $5 = $500. Therefore, the total increase is $7,500 + $500 = $8,000.

On July 1, 2010, Do-It-Yourself Warehouse Purchased 100 Barbeque Pits