Question

A company purchased inventory for​ $4,000 from a vendor on​ account, FOB shipping​ point, with terms of​ 2/15, n/30. The company paid​ $200 cash for freight in. The entry to record the payment of the invoice within 15 days of the invoice date by the purchaser would include​

Answer 1

cost of inventory comes out to be $ 4,120.

Explanation:

purchased inventory =​ $4,000

the invoice is paid in 15 days therefore discount available is 2% would be

hence,

cost of inventory =Purchase Value+Freight charges –Discount on net purchase

= $ 4,000 + $ 200 – ($4,000 x 2%)

= $ 4,000 + $ 200 – $ 80

= $ 4,120

hence the cost of inventory comes out to be $ 4,120.