Question

TX Manufacturing purchased inventory fro $2500 and paid a $200 freight bill. TX Manufacturing returned $350 of the goods to the seller and then took a 2% purchase discount. What is TX Manufacturing's final cost of inventory that it kept?

Answer 1

TX Manufacturing's final cost of inventory after adding freight, subtracting returns, and applying a purchase discount, is $2303.

Step-by-step explanation:

Calculation of Final Cost of Inventory

To calculate the final cost of inventory for TX Manufacturing, we follow these steps:

1. Begin with the initial inventory cost: The inventory was initially purchased for $2500.
2. Add the freight cost: $200 was paid for freight, which should be included in the cost of the inventory, bringing the total to $2700 ($2500 + $200).
3. Subtract the returned goods: TX Manufacturing returned goods worth $350, reducing the total cost of inventory to $2350 ($2700 - $350).
4. Calculate the purchase discount: A 2% discount is applied to the remaining amount. The discount is 2% of $2350, which is $47 ($2350 * 0.02).
5. Subtract the discount from the total cost to get the final inventory cost: $2350 - $47 = $2303.

Therefore, the final cost of the inventory that TX Manufacturing kept is $2303.