Freeman Corporation, which uses a perpetual inventory system, bought inventory for $10,000 and paid $300 freight on the purchase. Freeman returned goods that cost $2,000 and paid for the goods within the 2% discount period. As a result of these transactions, the inventory account increase bya $10,000. b $8,140. c $0. d $7,840.

Question

Isabela Luna

Business

2 April, 20:43

Freeman Corporation, which uses a perpetual inventory system, bought inventory for $10,000 and paid $300 freight on the purchase. Freeman returned goods that cost $2,000 and paid for the goods within the 2% discount period. As a result of these transactions, the inventory account increase bya $10,000. b $8,140. c $0. d $7,840.

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Answers (1)

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Keshawn Horton · Answer 1

b. $8,140

Explanation:

The computation is shown below:

= Merchandise amount - return and allowances - discount + freight charges

= $10,000 - $2,000 - $160 + $300

= $8,140

The discount = (Merchandise amount - return and allowances) * discount rate

= ($10,000 - $2,000) * 2%

= $160

Simply we deduct the returned inventory and discount expense and added the freight charges to the merchandise amount