If purchases were made under terms of (a) trade discount of 20%, (b) credit terms of 2/10, n/30, and (c) shipping terms of FOB shipping point, freight collect, which of the following sentences are FALSE? a. The entity will pay for its freight-in on the purchase. b. The invoice price is only 80% of the list price. c. If the entity uses the perpetual inventory method, shipping cost would be recorded as a debit to Freight-in and a credit to cash. d. If the entity paid on the tenth day, it would only pay 98% of the invoice price.
If purchases were made under terms of (a) trade discount of 20%, (b) credit terms of 2/10, n/30, and (c) shipping terms of FOB shipping point, freight collect, which of the following sentences are FALSE? a. The entity will pay for its freight-in on the purchase. b. The invoice price is only 80% of the list price. c. If the entity uses the perpetual inventory method, shipping cost would be recorded as a debit to Freight-in and a credit to cash. d. If the entity paid on the tenth day, it would only pay 98% of the invoice price.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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If purchases were made under terms of (a) trade discount of 20%, (b) credit terms of 2/10, n/30, and (c) shipping terms of FOB shipping point, freight collect, which of the following sentences are FALSE?
a. The entity will pay for its freight-in on the purchase.
b. The invoice price is only 80% of the list price.
c. If the entity uses the perpetual inventory method, shipping cost would be recorded as a debit to Freight-in and a credit to cash.
d. If the entity paid on the tenth day, it would only pay 98% of the invoice price.
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