Question

An item was shipped from a supplier under FOB shipping point. The invoice in the amount of $2,000 included payment terms of 2/10, n/30. When the invoice was paid, a purchase discount in the amount of $40 was taken. Other details relating to the purchase of this item included the following: shipping charges of $300, storage fees of $50, and insurance premium of $100. The cost of this inventory item is _____.a. $1,960 b. $2,410 c. $2,401 d. $2,404

Answer 1

b. $2,410

Step-by-step explanation:

The computation of the cost of this inventory item is shown below:

= Invoice amount - purchase discount + shipping charges + storage fees + insurance premium

= $2,000 -$40 + $300 + $50 + $100

= $2,410

Basically we deduct the purchase discount and the rest items are added to the invoice amount so that the total cost of the inventory could come