Assume Walmart bought, on credit, a truckload of bikes from RB Cycle costing $10

Question

Assume Walmart bought, on credit, a truckload of bikes from RB Cycle costing $10,500. The company paid $400 cash in transportation cost to a trucker to have the bikes delivered, immediately returned some of the bikes to RB Cycle costing $500, and then took advantage of RB Cycle’s 2/10, n/30 purchase discount.

How much did this inventory purchase cost Walmart?
Net Cost of Inventory Purchase

If Walmart's Inventory account had a beginning balance of $4,800 before the bike purchase from RB Cycle, what would be the dollar amount of Walmart's Cost of Goods Available for Sale after the purchase is complete?
Cost of Goods Available for Sale

Explanation / Answer

1 Net cost of inventory purchase: $10200 Cost $ 10500 Plus: Transportation cost 400 Deduct: Purchase returns -500 Deduct: Purchase discount [2% x (10500 - 500)] -200 Net cost of inventory purchase $ 10200 2 Cost of goods available for sale: $15000 Inventory, beginning balance $ 4800 Plus: Net cost of inventory purchase 10200 Cost of goods available for sale $ 15000

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