Question

Alison's dress shop buys dresses from McGuire Manufacturing. Alison purchased dresses from McGuire on July 17 and received an invoice with a list price amount of $6,000 and payment terms of 3/10, n/30. Alison uses the net method to record purchases. Alison should record the purchase at:

Answer 1

Answer:

Alison should record the purchase at: $5,820.

Explanation:

By Alison using the net method to record purchases means that the company records purchases, less discount.

The cash discount terms 3/10, n/30 mean 3% cash discount if the invoice amount is settled within 10 days; meanwhile, if it is settled within 30 days, the customer pays the full invoice amount.

Using the net method = $6,000 - (3/100 x $6,000)  = $5,820.