Darlington Company entered into the following business events during its first month of operations. The company uses the perpetual inventory system.1) The company purchased $13,100 of merchandise on account under terms 4/10, n/30.2) The company returned $2,600 of merchandise to the supplier before payment was made.3) The liability was paid within the discount period.4) All of the merchandise purchased was sold for $20,200 cash.What effect will the return of merchandise to the supplier in event (2) have on Darlington’s financial statements?

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Answered: Darlington Company entered into the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Darlington Company entered into the following business events during its first month of operations. The company uses the perpetual inventory system.

1) The company purchased $13,100 of merchandise on account under terms 4/10, n/30.
2) The company returned $2,600 of merchandise to the supplier before payment was made.
3) The liability was paid within the discount period.
4) All of the merchandise purchased was sold for $20,200 cash.

What effect will the return of merchandise to the supplier in event (2) have on Darlington’s financial statements?

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