Purchases Transactions Nieman Company purchased merchandise on account from Springhill Company for $9,900, terms 2/10, n/30. Nieman returned merchandise with an invoice amount of $2,400 and received full credit. a. If Nieman Company pays the invoice within the discount period, what is the amount of cash required for the payment? If required, round the answer to the nearest dollar.

The terms 2/10, n/30 indicates that the customer would get a 2% discount if the discount is made within 10 days. If the payment is not made in this period, the customer would have to pay the complete amount within 30 days. Taking this into consideration and as Nieman returned merchandise with an invoice amount of $2,400, you have to subtract this amount from the purchased they made:

$9,900-$2,400= $7,500

Then, you have to calculate the 2% of $7,500 to find the discount and subtract it from $7,500:

$7,500*2%= $150

$7,500-$150= $7,350

According to this, if Nieman Company pays the invoice within the discount period, the amount of cash required for the payment is: $7,350.