Purchased goods for $4,100 from Diamond Inc. with terms 2/10, n/30. 5 Returned goods costing $1,100 to Diamond Inc. for credit on account. 6 Purchased goods from Club Corp. for $1,000 with terms 2/10, n/30. 11 Paid the balance owed to Diamond Inc. 22 Paid Club Corp. in full. Required: Assume that Ace uses a perpetual inventory system and that the company had no inventory on hand at the beginning of the month. Calculate the cost of inventory as of June 30.

$3,940

Explanation:

Purchase from Diamond

The company received a discount of 2% because they paid within 10 days as per the terms of the sale.

Cost of inventory from Diamond:

= (Cost of goods - Returns) * (1 - 2%)

= (4,100 - 1,100) * 98%

= $2,940

Purchase from Club

Discount period expired so the full $1,000 is paid.

Total inventory cost:

= 2,940 + 1,000

= $3,940

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