During the month of June, Ace Incorporated purchased goods from two suppliers. The sequence of events was as follows: June 3 Purchased goods for $3,500 from Diamond Incorporated with terms 3/10, n/30. June 5 Returned goods costing $700 to Diamond Incorporated for credit on account. June 6 Purchased goods from Club Corporation for $1,150 with terms 3/10, n/30. June 11 Paid the balance owed to Diamond Incorporated. June 22 Paid Club Corporation 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. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

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anthougo anthougo · Answer 1 · 2021-10-15T10:53:34+02:00

Ace Incorporated's Cost of Inventory on June 30 is $3,950.

Data and Calculations:

June 3 Inventory $3,500 Accounts Payable (Diamond Incorporated) $3,500

terms 3/10, n/30

June 5 Accounts Payable (Diamond Incorporated) $700 Inventory $700

June 6 Inventory $1,150 Accounts Payable (Club Corporation) $1,150

terms 3/10, n/30

June 11 Accounts Payable (Diamond Incorporated) $2,800 Cash $2,716 Cash Discounts $84

June 22 Accounts Payable (Club Corporation) $1,150 Cash $1,150

Summary of the Cost of Inventory:

June 3 Inventory $3,500

June 5 Returns -700

June 6 Inventory $1,150

Cost of inventory $3,950

Thus, the Cost of Ace Incorporated's Inventory on June 30 is $3,950.

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