A Company Purchased Inventory for $71,000 from a Vendor on Account,FOB

question 73

Multiple Choice

A company purchased inventory for $71,000 from a vendor on account,FOB shipping point,with terms of 3/10,n/30.The company paid the shipper $1,700 cash for freight in.The company paid the vendor nine days after the invoice date.If there was no beginning inventory,the cost of inventory would be ________.(Assume a perpetual inventory system.)

• A) $70,570
• B) $72,700
• C) $67,170
• D) $69,300

---

Definitions:

Consolidated Equity

The total equity of a parent company and its subsidiaries after intercompany balances and transactions have been eliminated.

Equity Method

An accounting technique used in consolidating financial statements whereby an investment is initially recorded at cost and subsequently adjusted to reflect the investor's share of the investee's net income or losses.

Voting Shares

Shares of a company's stock that grant the shareholder the right to vote on corporate matters.

Purchase

The acquisition of goods or services in exchange for money, contributing to a company's expenses.