# Purchase-related transactions A retailer is considering the purchase of 500 units of a specific item from either of two suppliers. Their offers are as follows: Supplier One: $40 a unit, total of$20,000, 1/10, n/30, no charge for freight. Supplier Two: $39 a unit, total of$19,500, 2/10, n/30, plus freight of $500. Which of the two offers, Supplier One or Supplier Two, yields the lower price? BuyFind ### Accounting 27th Edition WARREN + 5 others Publisher: Cengage Learning, ISBN: 9781337272094 BuyFind ### Accounting 27th Edition WARREN + 5 others Publisher: Cengage Learning, ISBN: 9781337272094 #### Solutions Chapter Section Chapter 6, Problem 6.5EX Textbook Problem ## Purchase-related transactionsA retailer is considering the purchase of 500 units of a specific item from either of two suppliers. Their offers are as follows:Supplier One:$40 a unit, total of $20,000, 1/10, n/30, no charge for freight.Supplier Two:$39 a unit, total of $19,500, 2/10, n/30, plus freight of$500.Which of the two offers, Supplier One or Supplier Two, yields the lower price?

Expert Solution
To determine

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

To Find: Which supplier yields the lower price.

### Explanation of Solution

The following table shows the lower price among the two offers from both the suppliers.

 Particulars Supplier One Supplier Two Amount ($) Amount ($) Total Price 20,000 19,500 Less: Discount (200) (1) (390) (2) Price After Discount 19,800 19,110 Add: Freight Charges 0 500 Final Price 19,800 19,610

Table (1)

Working Notes:

Calculate the amount of discount for Supplier One...

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