Question

Use the following information to answer the next_2_questions, Roley Corporation uses the gross method of accounting for discounts. On July 1, 2019, Roley purchased $60,000 of inventory, terms 2/10, 1/30, FOB shipping point. Roley paid freight costs of $1,200 in cash on July 1. On July 3, Roley returned damaged goods and received credit of $6,000. 8. What dollar amount will Roley show for accounts payable on July 9, 2019? a. $60,000 b. $52.920 c. $61,200 d. $54,000 9. Roley paid the amount due on July 10, 2019. How much cash did Roley pay? a. $60,000 b. $52,920 c. $61,200 d. $54,000

Answer 1

Roley Corporation purchase inventory on terms 2/10, n/30, which means if payment is made within 10 days a 2% of discount will be received, and the credit period is of 30 days. FOB means Free on board i.e, Freight will be borne by Roley Corporation. Date Particulars 01-07-2019 Purchase of Inventory 01-07-2019 Freight Paid by Roley 03-07-2019 Received credit (a) (b) (c) Amount $ 60,000 $ 1,200 $ 6,000 Accounts payable as on 09/07/2019 (a-c) $60,000 - $6,000 $ 54,000 Solution 8. Roley's Accounts payable as on July 9,2019 Option d. $54000 is the correct answer Solution 9. Roley paid on 10/07/2019 i.e, within 10 days and getting 2% discount Amount payable $ 54,000 less: Discount @ 2% $ 1,080 $ 52,920

In case of any doubt or Issue, Please comment below