Renner Hardware Store demonstrated adept management of its May merchandising transactions, skillfully optimizing cash flow through the prompt utilization of early payment discounts and efficient handling of returns and refunds for quality-related issues.
In the initial transaction on May 1, Renner Hardware Store procured merchandise on account from Braun's Wholesale Supply for $4,200, with terms of 2/10, n/30. These terms indicated a 2% discount if paid within 10 days; otherwise, the net amount would be due within 30 days. Subsequently, on May 5, the store received a $300 credit from Braun's Wholesale Supply for returned merchandise.
Capitalizing on the advantageous terms, Renner promptly paid Braun's Wholesale Supply in full on May 10, availing themselves of the 2% discount. Additionally, on May 11, the store made a cash purchase of supplies amounting to $400, followed by another cash purchase of merchandise on May 12, totaling $1,400.
Addressing quality concerns, Renner received a $150 refund on May 15 for subpar merchandise, which was associated with a previous cash purchase. On May 17, the store engaged in another merchandising transaction, acquiring goods from Valley Distributors for $1,300, FOB shipping point, with terms of 2/10, n/30. Renner proactively paid $130 for freight related to the May 17 purchase on May 19.
Concluding the month's transactions, Renner Hardware Store made a purchase from Lumley, Inc. on May 25, acquiring merchandise for $620, FOB destination, with terms of 2/10, n/30.
The store continued its adept management of accounts payable by settling the payment to Valley Distributors in full on May 27, capitalizing on the 2% discount offered. Renner Hardware Store's strategic approach highlights its commitment to optimizing financial operations and maximizing benefits from available discounts.