Question

A company using the perpetual inventory system purchased inventory worth $25,000 on account with terms of 2/10, n/30. Defective inventory of $2,000 was returned 2 days later and the accounts were appropriately adjusted. If the invoice is paid within 10 days, the amount of the purchase discount that would be available to the company is ________.

10)
A) $460

B) $500

C) $490

D) $540

Answer 1

Answer:

The amount of the purchase discount that would be available to the company is A) $460

Explanation:

The terms of 2/10, n/30 means 2% discount for the payment within 10 days and the full amount to be paid within 30 days.

The company  purchased inventory worth $25,000 and $2,000 of the inventory was returned 2 days later.

The amount of the payable = $25,000 -  $2,000 = $23,000

The company paid within 10 days, early enough to receive discount.

The amount of the purchase discount = $23,000 x 2% = $460