Question

After the amount due on a sale of $28,000, terms 2/10, n/eom, is received from a customer within the discount period, the seller consents to the return of the entire shipment for a cash refund on March 1. The cost of the merchandise returned was $16,800.
Required:


(a) What is the amount of the refund owed to the customer?

(b)What is the amount of the refund owed to the customer?

Answer 1

Answer:

The correct answer is $27,440.

Explanation:

According to the scenario, computation of the given data are as follow:-

Term 2/10, n/eom shows 2% percent discount

Discount on sale = $28,000 × 2÷100= $560

(a). We can calculate the account receivable turnover by using following formula:-

Cash refund owed to customer = Amount due on sale - Sales discount

By putting the value, we get

= $28,000 - $560

= $27,440

The amount of the refund owed to the customer is $27,440.

(b). This is same as part (a).

So the amount of the refund owed to the customer is $27,440.