Chapter 11A, Problem 1RQ

At what amount are purchases recorded under the net-price method?

To determine

Indicate the amount at which the purchases are recorded under net-price method.

Explanation of Solution

Purchases: The amount of cost of merchandise bought during a certain period is referred to as cost of purchases.

Net-price method: The method of recording the inventory purchases at net of purchase discounts is referred to as net-price method. Under net-price method, the purchase discounts would be deducted from the gross purchases amount, and the net purchases amount is recorded.