Question

Whispering Winds Corp. purchased merchandise inventory with an invoice price of $11700 and credit terms of 2/10, n/30. What is the net cost of the goods if Whispering Winds Corp. pays within the discount period?

Answer 1

the net cost = 11,466

Step-by-step explanation:

To following journal entry is done to record the purchase, credit terms 2/10, n/30:

Dr Merchandise inventory 11,700

Cr Accounts payable 11,700

If the company pays within the discount period (10 days):

Dr Accounts payable 11,700

Cr Cash 11,466

Cr Purchase discounts 234

net cost of goods = $11,700 x 98% = $11,466