Reference no: EM132280378

Question - Purchase Returns and Allowances is a contra expense account under the category of cost of goods sold. It explains that vendor returns are credited to this account instead of the Purchases account. It also explains that the balance of the Purchase Returns and Allowances account is subtracted from the "delivered cost of purchases" on the income statement to arrive at the net delivered cost of purchases.

If you bought five shirts for $30 each over the Internet and the shipping charges were an additional $10 but you had to return one of the shirts because it was the wrong size (no expense for returned shipping), what was the net delivered cost of your purchases?