Question

Freeman Corporation, which uses a perpetual inventory system, bought inventory for $10,000 and paid $300 freight on the purchase. Freeman returned goods that cost $2,000 and paid for the goods within the 2% discount period. As a result of these transactions, the inventory account increase bya $10,000.b $8,140.c $0.d $7,840.

Answer 1

b. $8,140

Step-by-step explanation:

The computation is shown below:

= Merchandise amount - return and allowances - discount + freight charges

= $10,000 - $2,000 - $160 + $300

= $8,140

The discount = (Merchandise amount - return and allowances) × discount rate

= ($10,000 - $2,000) × 2%

= $160

Simply we deduct the returned inventory and discount expense and added the freight charges to the merchandise amount