Question

Purchase-Related Transactions The Wheatland Company purchased merchandise on account from a supplier for $16,800, terms 1/10, n/30. The Wheatland Company returned $2,200 of the merchandise and received full credit. a. What is the amount of cash required for the payment within the discount period?

Answer 1

Answer:

The amount of cash required for payment within the discount period is $14454.

Explanation:

The account payables were due for 16800 after the purchase. When thegoods are returned, the accounts receivables fall by 2200 and the new balance becomes 16800 - 2200 = $14600.

The discount term states that if payment is made within the next 10 days of purchase, a 1% discount can be availed (1/10).

If the payment is made in discount period then discount received will be,

Discount received = 14600 *1% = $146

The cash required for payment will be 14600 - 146 = $14454