Question

ACB Manufacturing purchased $6,000 of merchandise inventory from a vendor on account with credit terms of 2/10 or n/30. Because some of the merchandise was damaged, ACB Manufacturing returned $1,000 of the merchandise two days later. ACB Manufacturing uses the perpetual inventory system and made payment for the merchandise, less the return, within the discount period.

What is the final cost of the merchandise inventory for ACB manufacturing from this purchase?

-$5,000
-$4,900
-$4,880
-$5,880

Answer 1

The answer is: Inventory cost is $4,900

Step-by-step explanation:

ACB Manufacturing purchased $6,000 worth of merchandise with credit terms 2/10 or n/30. This means that if the company pays its debt within 10, it will receive a 2% discount.

It returned $1,000 worth of defective merchandise, decreasing its total debt to $5,000. Since ACB Manufacturing paid its debt within the first ten days, it got a 2% discount. It paid a total of $4,900 for the merchandise, so that should be its inventory cost.