Norfolk Sporting Goods purchases merchandise with a catalog list price of $30,000. The retailer receives a 30% trade discount and credit terms of 2/10, n/30. What amount should Norfolk debit to the Inventory account?

A) $21,000
B) $20,580
C) $30,000
D) $29,400

Question

Sophia Nicholls · Accepted Answer

Final Answer : B, Explanation :  The trade discount is 30% of the catalog list price, which is $9,000 ($30,000 x 0.30). This means the cost of the merchandise (the amount Norfolk will pay) is $21,000 ($30,000 - $9,000). If Norfolk pays within 10 days, they can take advantage of the 2% discount, which is $420 ($21,000 x 0.02). Therefore, the amount that Norfolk should debit to the Inventory account is $20,580 ($21,000 - $420).

Norfolk Sporting Goods purchases merchandise with a catalog list price of $30,000. The retailer receives a 30% trade discount and credit terms of 2/10, n/30. What amount should Norfolk debit to the Inventory account?

A) $21,000
B) $20,580
C) $30,000
D) $29,400

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Norfolk Sporting Goods purchases merchandise with a catalog list price of $30,000. The retailer receives a 30% trade discount and credit terms of 2/10, n/30. What amount should Norfolk debit to the Inventory account?A) $21,000B) $20,580C) $30,000D) $29,400

Definitions

Learning Objectives

Learning Objectives

Related questions

Norfolk Sporting Goods purchases merchandise with a catalog list price of $30,000. The retailer receives a 30% trade discount and credit terms of 2/10, n/30. What amount should Norfolk debit to the Inventory account?

A) $21,000
B) $20,580
C) $30,000
D) $29,400