Based on the following information, what would be recorded as purchases discount if the invoice is...
Based on the following information, what would be recorded as purchases discount if the invoice is paid within the discount period?
|
1. |
$5,000 of merchandise inventory was ordered on April 2, 2016. |
|
2. |
$2,000 of this merchandise was received on April 5, 2016. |
|
3. |
On April 6, 2016, an invoice dated April 4, 2016, with terms of 2/10, net 30 for $2,150 which included a $150 prepaid freight cost, was received. |
|
4. |
On April 10, 2016, $500 of the merchandise was returned to the seller. |
a.$30
b.$100
c.$43
d.$33
Homework Answers
Option (a) is correct
Here, since the freight is prepaid, so we will exclude it from the calculation of purchase discount. Also, sales returns will not be included in the purchase discount calculation.
Purchase discount = (Invoice amount - Freight charges - Sales return) * 2%
Purchase discount = ($2150 - $150 - $500) * 2%
Purchase discount = $1500 * 2% = $30
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