CH6 HW 22 Paid Club Corp in full of the month Caculate the c

CH6 HW 22 Paid Club Corp, in full of the month Caculate the cost of inventory as of June 30. (Do not round intermediate

Solution

Cost of inventory = $4,490

Workings

Total Purchase Price

$5,550

Less : Purchase Returns

(1,000)

Less : Discount received from Diamond Inc

(60)

Cost of inventory

$4,490

Purchases [ $4,000 + 1,550 ] = $5,550

Purchase discount received from Diamon Inc = [ ( $4,000 – 1,000) x 2%] = $60

Ace Corporation paid balance due to Diamond Inc after 8 days of the date of purchase, Hence they will get discount from Diamond Inc (within the discount period).

Ace Corporation paid balance due to Club Corp. after 16 days after the purchase (outside the discount period,).

Total Purchase Price	$5,550
Less : Purchase Returns	(1,000)
Less : Discount received from Diamond Inc	(60)
Cost of inventory	$4,490