Howard Company purchased merchandise inventory with an invoice price of $7,000 and credit terms of 2/10, n/30. What is the net cost of the goods if Howard Company pays within the discount period? Solution Net cost of goods = purchase price -Discount = 7,000 - (7,000 * .02) = 7000 - 140 = $ 6860.

1. Howard Company purchased merchandise inventory with an invoice price of $7,000 and credit
terms of 2/10, n/30. What is the net cost of the goods if Howard Company pays within the
discount period?
Solution
Net cost of goods = purchase price -Discount
= 7,000 - (7,000 * .02)
= 7000 - 140
= $ 6860