Final answer:
The student's question involves a business transaction where Niche Car Company purchased 2,800 tires using the gross method of accounting for purchase discounts. The payment terms include a potential 2% discount if payment is made within 10 days, or the full amount due in 30 days, under a perpetual inventory system.
Step-by-step explanation:
The question relates to the purchase of tires by Niche Car Company from the Treadwell Company with specified payment terms. On July 15, 2024, Niche purchased 2,800 tires at $35 each, with the terms being 2/10, n/30. This means that Niche is entitled to a 2% discount if the payment is made within 10 days; otherwise, the net amount is due within 30 days.
Using the gross method under a perpetual inventory system, no discount is recorded until it is actually taken. If Niche pays within the discount period, the purchase cost will be adjusted to reflect the discount savings. If the payment is made after the discount period, the full purchase price is recognized. The relevance of tariffs, such as those on imported tires that affected the tire industry and costs, provides necessary background context indicating economic factors that could impact the pricing and import strategies of tire companies.