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 merchandise inventory account?

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

Question

Maria Rojas · Accepted Answer

Final Answer : B, Explanation :  The first step is to calculate the trade discount:30,000 x 0.30 = 9,000So the net price is:30,000 - 9,000 = 21,000The credit terms are 2/10, n/30, which means a 2% discount is offered if payment is made within 10 days. Otherwise, the full amount is due within 30 days.Since Norfolk Sporting Goods is taking the discount, the amount to be debited to the merchandise inventory account is:21,000 x 0.98 = 20,580Therefore, the best choice is B.

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 merchandise 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 merchandise inventory account?A) $21,000B) $20,580C) $30,000D) $29,400

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Learning Objectives

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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 merchandise inventory account?

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