Information related to High Co. is presented below. 1. On March 1, the company purchased merchandise from Low Company for $60,000. The credit terms for this purchase is 1/8, net/30. 2. On March 2, the company paid freight costs of $5,000 on merchandise purchased on March 1. 3. On March 5, High Company returned damaged merchandise of $8,000 to Low Company. 4. On March 10, High Company paid the amount due to Low Company in full. Required: (a) How would you record March 10 transaction in the books of High Company using the perpetual inventory method? (b) How would your answer in (a) be different if High Company made the payment on March 8, instead of March 10? (c) On March 20, High Company sold 90% of the merchandise purchased from Low Company at $70,000. How much profit High Company made from this sale of merchandise?
Information related to High Co. is presented below. 1. On March 1, the company purchased merchandise from Low Company for $60,000. The credit terms for this purchase is 1/8, net/30. 2. On March 2, the company paid freight costs of $5,000 on merchandise purchased on March 1. 3. On March 5, High Company returned damaged merchandise of $8,000 to Low Company. 4. On March 10, High Company paid the amount due to Low Company in full. Required: (a) How would you record March 10 transaction in the books of High Company using the perpetual inventory method? (b) How would your answer in (a) be different if High Company made the payment on March 8, instead of March 10? (c) On March 20, High Company sold 90% of the merchandise purchased from Low Company at $70,000. How much profit High Company made from this sale of merchandise?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Information related to High Co. is presented below.
1. On March 1, the company purchased merchandise from Low Comparty for $60,000. The credit terms for
this purchase is 1/8, net/30.
2. On March 2, the company paid freight costs of $5,000 on merchandise purchased on March 1.
3. On March 5, High Company returned damaged merchandise of $8,000 to Low Company.
4. On March 10, High Company paid the amount due to Low Company in full.
Required:
(a) How would you record March 10 transaction in the books of High Company using the perpetual
inventory method?
(b) How would your answer in (a) be different if High Company made the payment on March 8, instead of
March 10?
(c) On March 20, High Company sold 90% of the merchandise purchased from Low Company at $70,000.
How much profit High Company made from this sale of merchandise?
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