Question

A company purchased $6,500 of merchandise on May 1 with terms of 2/10, net 30. On May 6, it returned $500 of that merchandise. On May 8, it paid the balance owed for merchandise, taking any discount it is entitled to. The cash paid on May 8 is:_______
a. $4,500.
b. S4 250
c. $4,160.
d. $4,165.
e. $4,410.

Answer 1

Answer:

The cash paid on May 8 is: $5,880

Explanation:

Credit terms of 2/10, net 30 means that 2% discount for the payment within 10 days and the full amount to be paid within 30 days.

The company purchased $6,500 of merchandise on May 1. On May 6, it returned $500 of that merchandise.

The balance owed for merchandise = $6,500 - $500 = $6,000

On May 8, it paid the balance owed for merchandise, taking any discount it is entitled to.

The company took the appropriate discount:

2% x $6,000 = $120

The cash paid = $6,000 - $120 = $5,880