Question

Whispering’s Market recorded the following events involving a recent purchase of inventory:

Received goods for $115000, terms 2/10, n/30.
Returned $2600 of the shipment for credit.
Paid $400 freight on the shipment.
Paid the invoice within the discount period.

As a result of these events, the company’s inventory

increased by $110152.

increased by $110544.

increased by $110552.

increased by $112800.

The collection of a $1800 account within the 2 percent discount period will result in a

credit to Cash for $1764.

debit to Accounts Receivable for $1764.

credit to Accounts Receivable for $1764.

debit to Sales Discounts for $36.

Bramble Corp. sells merchandise on account for $7200 to Kingbird, Inc. with credit terms of 2/13, n/30. Kingbird, Inc. returns $1500 of merchandise that was damaged, along with a check to settle the account within the discount period. What is the amount of the check?

$7086

$5586

$7056

$5700

Answer 1

1) Calculate amount of inventory

Purchase	115000
Purchase return	-2600
Purchase discount (112400*2%)	-2248
Freight in	400
Total	110552

So answer is c) increased by $110552.

2) Journal entry

No	General Journal	Debit	Credit
	Cash (1800*98%)	1764
	Sales discount	36
	Account receivable		1800

So answer is d) debit to Sales Discounts for $36.

3) Amount of the Check = (7200-1500)*98% = 5586

So answer is b) $5586