Walsh Retailers purchased merchandise with a list price of $125,000, subject to trade discounts of 20% and 10%, with no cash discounts allowable. Walsh should record the cost of this merchandise as
A) $87,500.
B) $90,000.
C) $97,500.
D) $125,000.

Question

Quizplus · Accepted Answer

The trade discounts are applied sequentially. First, a 20% discount on $125,000 reduces the price to $100,000. Then, a 10% discount on $100,000 reduces it further to $90,000.

Walsh Retailers Purchased Merchandise with a List Price of $125,000