Question

A company purchased $4,000 worth of merchandise. Transportation costs were an additional $350. The company later returned $275 worth of merchandise and paid the invoice with the 2% cash discount period. The total amount paid for this merchandise is

Answer 1

Answer:

$4,000.50

Explanation:

Given:

Purchase price of merchandise= $4,000

Transportation costs = $350

Return merchandise = $275

Cash Discount = 2% = 0.02

Computation of Total amount paid:

Total merchandise in hand = $4,000 - $275 = $3725

Total amount paid = [Total merchandise in hand x (1-Discount rate)] + Transportation costs

Total amount paid = [$3,725 x (1-0.02)] + 350

Total amount paid = [$3,,725 x (0.98)] + 350

Total amount paid = [$3,650.50] + 350

Total amount paid = $4,000.50