North Texas Inc. started 2018 with $100,000 of merchandise
inventory on hand. During 2018, $600,000 in merchandise was
purchased on account with credit terms of 2/15, n/45. All discounts
were taken. Purchases were all made f.o.b. shipping point. North
Texas paid freight charges of $8400. Merchandise with an invoice
amount of $5000 was returned for credit. Cost of goods sold for the
year was $369,000. North Texas uses a perpetual inventory
system.
Assuming North Texas uses the gross method to record purchases,
what is the cost of goods available for sale?
A)$691,400.
B)$703,600.
C)$691,500.
D)$703,400.
Answer | |
The correct option is C.$691,500 |
|
the following is the required table: | |
Beginning inventory | $ 100,000 |
Add: purchases | $ 600,000 |
less: returns at invoice price | -$ 5,000 |
less:Discounts @3% on (600,000 - 5000 =>595,100*2%) | -$ 11,900 |
add: freight | $ 8,400 |
cost of goods available for sale | $ 691,500 |
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