A retailer purchases merchandise with a catalog list price of $25,000. The retailer receives a 30% trade discount and credit terms of 2/10, n/30. What amount should the retailer debit to the Merchandise Inventory account?

Question

Quizplus · Accepted Answer

The retailer should debit the Merchandise Inventory account for the net amount after the trade discount, which is $25,000 - 30% of $25,000 = $17,500. The cash discount is not considered in the inventory cost.

A Retailer Purchases Merchandise with a Catalog List Price of $25,000