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 Merchandise Inventory account?

Question

Quizplus · Accepted Answer

The trade discount rate is 30%, which means Norfolk Sporting Goods only needs to pay 70% of the catalog list price.

30,000 x 0.7 = 21,000

This is the amount that Norfolk Sporting Goods needs to pay for the merchandise. However, if the payment is made within 10 days, they can take a 2% discount off the cost of the goods.

21,000 x 0.98 = 20,580

Therefore, the amount that Norfolk Sporting Goods should debit to the Merchandise Inventory account is $20,580.

Norfolk Sporting Goods Purchases Merchandise with a Catalog List Price