Question

On January 15, Ayayai Corp. sells merchandise on account to Martinez Associates for $7000 with terms 1/10, n/30. On January 20, Martinez returns merchandise worth $900 to Ayayai. On January 24, payment is received from Martinez for the balance due. What is the amount of cash received?

Answer 1

Answer:

The amount of cash received will be $6039

Explanation:

The amount of cash received on January 24 will be the net amount after deducting the sales returns and the discount allowed as the payment is made within 10 days period of the sale and the terms 1/10 states a 1% discount if payment is made within 10 days.

The net value of receivables after sales returns = 7000 - 900 = 6100

The discount allowed = 6100 * 1% = 61

Cash to be received = 6100 - 61 = $6039