Reporting Purchases

E6-7 Reporting Purchases and Purchase Discounts Using a Perpetual Inventory System [LO 6-3]

During the months of January and February, Axe Corporation purchased goods from three suppliers. The sequence of events was as follows:

Jan. 6  Purchased goods for $700 from Green with terms 2/15, n/60.  6  Purchased goods from Munoz for $550 with terms 2/15, n/60.  14  Paid Green in full.  Feb. 2  Paid Munoz in full.  28  Purchased goods for $300 from Reynolds with terms 2/15, n/60.

Required:

Assume that Axe uses a perpetual inventory system, the company had no inventory on hand at the beginning of January, and no sales were made during January and February. Calculate the cost of inventory as of February 28.