During the month of June, Ace Incorporated purchased goods from two suppliers. T

Question

During the month of June, Ace Incorporated purchased goods from two suppliers. The sequence of events was as follows:

Required:

Assume that Ace uses a perpetual inventory system and that the company had no inventory on hand at the beginning of the month. Calculate the cost of inventory as of June 30.

June 3 Purchased goods for $5,000 from Diamond Inc. with terms 2/10, n/30. 5 Returned goods costing $1,000 to Diamond Inc. for credit on account. 6 Purchased goods from Club Corp. for $950 with terms 2.5/10, n/30. 11 Paid the balance owed to Diamond Inc. 22 Paid Club Corp. in full.

Explanation / Answer

3-Jun Cost of goods 5,000 5-Jun Purchase returned -1,000 6-Jun purchase of goods 950 11-Jun purchase allowance (4000*2%) -80 Cost of inventory 4,870 answer

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