Flynn Company purchased merchandise inventory with an invoice price of $5,000 an
ID: 2522500 • Letter: F
Question
Flynn Company purchased merchandise inventory with an invoice price of $5,000 and credit terms of 1/10, n/30. What is the net cost of the goods if Flynn Company pays within the discount period? 1. 2. Stine Company purchased merchandise with an invoice price of $2,000 and credit terms of 2/10, n/30. Assuming a 360 day year, what is the implied annual interest rate inherent in the credit terms? a. 20% b. 24% ?. 36% d. 7296 3. Zach's Market recorded the following events involving a recent purchase of merchandise Received goods for $55,000, terms 2/10, n/30. Returned $2,000 of the shipment for credit. Paid $250 freight on the shipment. Paid the invoice within the discount period. As a result of these events, how much the company's merchandise inventory increased? A credit sale of $1000 is made on April 25, terms 3/10, n/30, on which a return of $50 is granted on April 28., What amount is received as payment in full on May 4? 4.Explanation / Answer
1.
The term 1/10, n/30 means if cash is paid within 10 days from the date of purchase, the purchaser will get a discount of 1% on selling price. Otherwise cash should be paid within 30 days from the date of purchase without any discount.
Net cost of the goods
= Purchase price - Discount
= $5,000 - ($5,000 x 1%)
= $4,950