Question

Juniper Company uses a perpetual inventory system. The company purchased $9,750 of merchandise on August 7 with terms 1/10, n/30. On August 11, it returned $1,500 worth of merchandise. On August 16, it paid the full amount due. The amount of the cash paid on August 16 equals _____

Answer 1

The amount of cash paid on August 16 equals $7,275.

Step-by-step explanation:

To determine the cash paid on August 16, we need to calculate the net amount after considering the discount and the merchandise return:

1. Calculate the net amount of the merchandise purchase by subtracting the discount: $9,750 - ($9,750 * 0.1) = $8,775
2. Subtract the value of the merchandise return from the net amount: $8,775 - $1,500 = $7,275
3. The amount of cash paid on August 16 equals the net amount after considering the merchandise return: $7,275

Answer 2

Amount of cash paid on Aug 16 = $8,167.50

Step-by-step explanation:

As for the information provided the terms of purchase are,

1% discount if payment made within 10 days,

and a total credit period of 30 days without any discount beyond 10 days.

Here, inventory purchased on August 7 = $9,750

Less; Return on 11 August = $1,500

Net Purchases = $8,250

Since payment is made on 16 August that is within 10 days from purchase discount will be received

= $8,250
`*` 1% = $82.50

Amount of cash paid on Aug 16 = $8,250 - $82.50 = $8,167.50