Renner Hardware Store adeptly managed its May merchandising transactions, optimizing cash flow by promptly utilizing early payment discounts and efficiently handling returns and refunds for quality issues.
Renner Hardware Store engaged in several merchandising transactions in the month of May. On May 1, the store purchased merchandise on account from Braun's Wholesale Supply for $4,200 with terms 2/10, n/30, indicating a 2% discount if paid within 10 days, otherwise, the net amount is due in 30 days. On May 5, Renner received a $300 credit from Braun's Wholesale Supply for returned merchandise.
On May 10, Renner paid Braun's Wholesale Supply in full, taking advantage of the 2% discount. Subsequently, on May 11, the store purchased supplies for cash totaling $400 and, on May 12, bought merchandise for cash amounting to $1,400.
On May 15, Renner received a $150 refund for poor-quality merchandise from a supplier, which was related to a cash purchase made earlier. On May 17, the store purchased merchandise from Valley Distributors for $1,300, FOB shipping point, with terms 2/10, n/30. Renner paid $130 for freight on the May 17 purchase on May 19.
Finally, on May 25, the store purchased merchandise from Lumley, Inc. for $620, FOB destination, with terms 2/10, n/30. Renner paid Valley Distributors in full on May 27, taking advantage of the 2% discount. The store continues to manage its accounts payable efficiently by capitalizing on early payment discounts when available.