Company A sells merchandise to Company B that intends on reselling to retail consumers. B purchases merchandise under the terms of 5/15, n/30. B purchases 100 units at 8$ a unit. The cost to A of the merchandise sold was 5$ per unit.

After 10 days, B returns 10 units to A. There were no defects in the products and A intends on reselling these 10 items at a later date.

After 14 days, B pays what they owe to A.

Questions:

1) What is the impact to the income statement for B as a result of the purchase of 100 units, less the 10 items returned?

2) For A, the return of the 10 items by B will result in what impact to the income statement? Please use the net amount.

3) After the payment by B to A, what is the net sales amount that B would show on its income statement?

Answer rating: 100% (QA)

The impact to the income statement for Company B as a result of the purchase of 100 units less the 1... View the full answer