Question

During the month of June, Ace Incorporated purchased goods from two suppliers. The sequence of events was as follows: June 3 Purchased goods for $4,800 from Diamond Inc. with terms 3/12, n/45. 5 Returned goods costing $1,450 to Diamond Inc. for credit on account. 6 Purchased goods from Club Corp. for $1,350 with terms 3/12, n/45. 11 Paid the balance owed to Diamond Inc. 22 Paid Club Corp. in full. Required: Assume that Ace uses a perpetual inventory system and that the company had no inventory on hand at the beginning of the month. Calculate the cost of inventory as of June 30.

Answer 1

Solution and Explanation:

Calculation of the cost of inventory as of June is as follows:

Particulars Amount Amount

(in dollars) (In dollars)

Begnining inventory 0.00

Purchases:

June 3rd from D inc. 4800

June 6th from C corp. 1350 6150

Total available 6150

Less: Returned to D Inc. 1450

Less: the allowance and discounts 100.50 1550.50

(($4800 minus $1450) multiply 3 percent)

Cost of the inventory as of June 30 4599.50

Thus, the cost of inventory as per the above calculations is $4599.50