Question

Waterway’s Market recorded the following events involving a recent purchase of merchandise:

Received goods for $75000, terms 1/10, n/30.
Returned $1100 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:_______.

Answer 1

$73,561

Explanation:

The computation of inventory increased is shown below:-

Inventory increase = (Received goods - Returned goods) × (1 - 0.01) + Freight charges

= ($75,000 - $1,100) × 0.99 + $400

= $73,900 × 0.99 + $400

= $73,161 + $400

= $73,561

Therefore for computing the increased inventory we have simply applied the above formula.