Novak’s market recorded the following events involving a recent purchase of inventory: received goods for $112000, terms 2/11, n/30. returned $2200 of the shipment for credit. paid $400 freight on the shipment. paid the invoice within the discount period. as a result of these events, the company’s inventory increased by $110200. increased by $107604. increased by $108004. increased by $107996.

Option (C) is correct

Explanation:

The payment is made during the discount period of 11 days so the 2% discount rate would be applicable.

Goods purchased =   $112,000

Goods returned = $2,200

Discount =   (Goods purchased - goods returned) × 2%

               = ($112,000 - $2,200) × 2%

               = $2,196

Net purchase = Goods purchased - returned - Discount

                       = $112,000 - $2,200 - $2,196

                       = $107,604

Total inventory cost = Net purchase + Freight cost

                                 = $107,604 + $400

                                 = $108,004

Therefore, company’s inventory increased by $108,004.

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