Question

The Banks Company sold merchandise on account for $35,000 with terms 2/10, n/30. The cost of merchandise sold was $27,600. If the invoice is paid in the discount period, what is the amount of cash received by Banks Company?
a.$27,048
b.$27,600
c.$35,000
d.$34,300

Answer 1

Answer:

The answer is: D) $34,300

Explanation:

The selling price was $35,000 with terms 2/10, n/30. This means that if the buyer pays their bill before the ten days period, they will get a 2% discount. If the buyer pays the bill after the ten days period but before thirty days, they will pay the full amount.

Since the buyer paid before the ten days period they will get a 2% discount. The total cash received by Banks Company was $35,000 x 98% = $34,300