Question

If Bounder Dog Supplies, Inc. purchased inventory at $1,850 list price and the terms were 4/10, n/30, what would be the value associated with the inventory if payment was made within 10 days?

Multiple Choice

• $1,850.

• $1,924.

• $1,801.

• $1,776.

Answer 1

List price of inventory = $1,850

Purchase terms = 4/10, n/30,

It means discount of 10% will be allowed if payment is made within 10 days.

Since payment was made within 10 days, hence 4% discount will be allowed.

Discount amount = 1,850 x 4%

= $74

Cost of inventory to be recorded = List price of inventory - Discount amount

= 1,850 - 74

= $1,776

Fourth option is correct.

Kindly give a positive rating if you are satisfied with the answer. Feel free to ask if you have any doubt. Thanks.