Norfolk Sporting Goods purchases merchandise with a catalog list price of $30,000. The retailer receives a 30% trade discount and credit terms of 2/10, n/30. What amount should Norfolk debit to the Inventory account?

Question

Quizplus · Accepted Answer

Price after trade discount = $30,000 - ($30,000 × 30%) = $30,000 - $9,000 = $21,000
Debit to Inventory account = Price after trade discount - Discount as per credit term = [$21,000 - (2% × $21,000)] = $21,000 - $420 = $20,580?

Norfolk Sporting Goods Purchases Merchandise with a Catalog List Price