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Problem 1 - Metlock Co. purchased goods with a list price of $168,300, subject to trade discounts of 20% and 10%, with no cash discounts allowable. How much should Metlock Co. record as the cost of these goods ?
Solution:
List price = $168,300
First discount = $168,300*20% = $33,660
Second discount = ($168,300 - $33,660)*10% = $13,464
Cost of goods = $168,300 - $33,660 - $13,464 = $121,176
Metlock Co. should record the cost of these goods as $121,176
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