The effect of receiving inventory worth $6,200 from the supplier, purchased with terms 1/5, n/15, on the liabilities of the business is as follows:
1. Increase in Accounts Payable:
• When the inventory is received, the business owes $6,200 to the supplier for the purchase. This amount is recorded as an increase in accounts payable, which represents the amount owed to suppliers or creditors.
2. Short-term Liability:
• The terms 1/5, n/15 indicate that the business can take advantage of a cash discount of 1% if the payment is made within 5 days, with the full amount due within 15 days. Until the payment is made, the amount owed to the supplier constitutes a short-term liability for the business.
Overall, the effect of receiving inventory on the liabilities of the business is an increase in accounts payable, representing the amount owed to the supplier for the inventory purchased.:)
