E7-15 Reporting Purchases, Purchase Discounts, and Purchase Returns Using a Perp

ID: 2503931 • Letter: E

Question

E7-15 Reporting Purchases, Purchase Discounts, and Purchase Returns Using a Perpetual Inventory System [LO 7-5]

During the month of June, Ace Incorporated purchased goods from two suppliers. The sequence of events was as follows:

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. (Do not round your intermediate calculations. Round your answer to the nearest whole dollar amount.)

During the month of June, Ace Incorporated purchased goods from two suppliers. The sequence of events was as follows:

Explanation / Answer

Assumed there is no inventory on hand at beginning,the total cost of inventory as on june 30th

Amount($)

Beginning inventory

Purchases:

June 3rd form diamond inc. $3800

June 6th from club corp $200

$4,000

Less:returns to diamond $1,200

($1,200)

Less: allowances/discounts

3800-1200*3.0% = 78$

($78)

Total inventory cost

$2722

Interest has been calculated as below:

Since ace corporation paid to diamonds fully within 10 days, he could get 3% discount on