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Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615

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BuyFindarrow_forward

Accounting (Text Only)

26th Edition
Carl Warren + 2 others
ISBN: 9781285743615
Textbook Problem
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Purchase-related transactions

A retailer is considering the purchase of 250 units of a specific item from either of two suppliers . Their offers are as follows:

Supplier One: $400 a unit, total of $100,000, 1/10, n/ 30, no charge for freight.

Supplier Two: $399 a unit, total of $99,750, 2/ 10, n/ 30, plus freight of $975.

Which of the two offers, Supplier One or Supplier Two, yields the lower price?

To determine

Purchases is an activity of acquiring the merchandise inventory of a business.

To Find: Which supplier yields the lower price.

Explanation

Working Notes:

Calculate the amount of discount for Supplier One.

Total Price = $100,000

Discount percentage = 1% (1/10, n/30)

Amount of discount = Total price×Discount=$100,000×1%=$1,000 (1)

Calculate the amount of discount for Supplier Two

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