Question

Etcetera Clothing sold merchandise inventory on account at a price of $15,000 with payment terms of 2/10, n/30. The merchandise cost Etcetera Clothing $10,000. If the customer paid for the merchandise 5 days after receiving the invoice, how much cash was collected by Etcetera Clothing?

Answer 1

Answer:

$14,700

Explanation:

We know,

2/10, n/30 means if a customer pays within 10 days, he/she will get a discount of 2% of his original purchase. However, the customer has to pay the full amount within 30 days.

As Etcetera Clothing received the payment within 5 days, the company gave a discount of 2% according to the terms. Therefore, Etcetera Clothing would receive =

$15,000 - ($15,000 × 2%)

= $15,000 - 300

= $14,700