Question

A company purchases inventory on account for $45,000 with terms 2/10, n/30. Under the net method of accounting for purchases, the purchase would be recorded at:_______

a. $36,000.
b. $40,500.
c. $45,000.
d. $44,100.

Answer 1

Answer:d. $44,100.

Step-by-step explanation:

The net method is a way a company or firm records its customer's invoice. Under the net method of Accounting for purchases, The record of purchases are recorded considering the cash discount.

Therefore

Purchase price = $45000

Cash Discount at terms 2/10 n/30

$45000 x 2% = $45,000 x 0.02 =$900

Net purchase price = $45000 - $900 = $44,100.

The journal to record the inventory purchased on account using the net method will be

Accounts Titles Debit Credit

Inventory $44,100.

Accounts payable $44,100.