Assume the following data concerning a purchase of merchandise by Icon Co. on April 2:

April 2.

Purchased $4,000 of merchandise on account from Gamma Co., terms 2/10, n/30.

4. Returned $2,000 of the merchandise purchased on April 2.

12. Paid for the purchase of April 2 less the return and discount.

The purchase amount that Icon Co. would record on April 2 would be

$3,200.

$3,920.

$4,000.

None of these choices are correct.

Question

Fiona Black

Business

5 May, 01:58

Assume the following data concerning a purchase of merchandise by Icon Co. on April 2:

April 2.

Purchased $4,000 of merchandise on account from Gamma Co., terms 2/10, n/30.

4. Returned $2,000 of the merchandise purchased on April 2.

12. Paid for the purchase of April 2 less the return and discount.

The purchase amount that Icon Co. would record on April 2 would be

$3,200.

$3,920.

$4,000.

None of these choices are correct.

+3

Answers (1)

Know the Answer?

Braelyn · Answer 1

Correct answer is $4,000

Explanation:

During the purchase on April 2, Icon Co. should recognize the gross amount of $4,000 purchases. Unless it is clearly stated in the problem that Icon Co. uses net method in recording discounts, said discount will be recognized and recorded upon payment of the purchases that falls into the discounted period of contract. Purchase returns will be recognized on the day the company made it.