Assume Anderson’s General Store bought, on credit, a truckload of merchandise fr

Question

Assume Anderson’s General Store bought, on credit, a truckload of merchandise from American Wholesaling costing $22,600. If the company was charged $610 in transportation cost by National Trucking, immediately returned goods to American Wholesaling costing $1,100, and then took advantage of American Wholesaling’s 1/10, n/30 purchase discount.

Assume Anderson’s General Store bought, on credit, a truckload of merchandise from American Wholesaling costing $22,600. If the company was charged $610 in transportation cost by National Trucking, immediately returned goods to American Wholesaling costing $1,100, and then took advantage of American Wholesaling’s 1/10, n/30 purchase discount.

Explanation / Answer

Inventory cost = $ 21,895

Merchandise cost                     $22,600

Add : Transportation cost $610

Less : Returned goods             ($1,100)

Less : Purchase discount ($215)

[($22600 - 1100) x 1%]

Inventory cost                         $ 21,895

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