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26 October, 18:27

Whispering Winds Corp. purchased merchandise inventory with an invoice price of $11700 and credit terms of 2/10, n/30. What is the net cost of the goods if Whispering Winds Corp. pays within the discount period?

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  1. 26 October, 19:44
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    the net cost = 11,466

    Explanation:

    To following journal entry is done to record the purchase, credit terms 2/10, n/30:

    Dr Merchandise inventory 11,700

    Cr Accounts payable 11,700

    If the company pays within the discount period (10 days):

    Dr Accounts payable 11,700

    Cr Cash 11,466

    Cr Purchase discounts 234

    net cost of goods = $11,700 x 98% = $11,466
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