I am not sure how I solve this question, I know how to calculate the discount which would be 2640 off from the 132,000 but all of the answers don't look like the numbers I am coming up with. Vaughn's Market recorded the following events involving a recent purchase of inventory:Received goods for $132000, terms 2/15, n/30.Returned $2600 of the shipment for credit.Paid $400 freight on the shipment.Paid the invoice within the discount period.As a result of these events, the company's inventoryO increased by $126812.O increased by $129800.O increased by $127204.O increased by $127212.

Answered: I am not sure how I solve this…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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I am not sure how I solve this question, I know how to calculate the discount which would be 2640 off from the 132,000 but all of the answers don't look like the numbers I am coming up with.

Vaughn's Market recorded the following events involving a recent purchase of inventory:
Received goods for $132000, terms 2/15, n/30.
Returned $2600 of the shipment for credit.
Paid $400 freight on the shipment.
Paid the invoice within the discount period.
As a result of these events, the company's inventory
O increased by $126812.
O increased by $129800.
O increased by $127204.
O increased by $127212.

Expert Solution

Step 1

As Per the accounting Standard IFRS Accounting standard IAS 2 inventory cost will include all the directly attributable cost which brings the inventory in its present location and condition, hence freight cost incur of 400 on the shipment is form part of inventory valuation.

Similarly discount term of 2/15 means 2% discount will be given if amount paid within 15 Days. and n/30 means normal credit period is 30 days.

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