Question

A company purchased $11,700 of merchandise on June 15 with terms of 2/10, n/45, and FOB shipping point. The freight charge, $1,350, was added to the invoice amount. On June 20, it returned $2,160 of that merchandise. On June 24, it paid the balance owed for the merchandise taking any discount it is entitled to. The cash paid on June 24 equals:

Answer 1

Answer:

The cash paid is $10,500

Explanation:

The computation of the cash paid is shown below:

= Merchandise cost + Prepaid Freight charge - Purchase returns - Discount expenses at 2%

= $11,700 + $1,350 - $2,160 - [($11,700 - $2,160) × 0.02]

= $11,500 + $1,350 - $2,160 - $190 .08

= $10,500

Hence, the cash paid is $10,500

We simply applied the above formula