Question

A company purchased $1,800 of merchandise on July 5 with terms 2/10, n/30. On July 7, it returned $200 worth of merchandise. On July 28, it paid the full amount due. The amount of the cash paid on July 28 equals: 123) _____

answer choices
A) $1,800.
B) $200.
C) $1,568.
D) $1,600.
E) $1,564.

Answer 1

The answer is D) $1600

Step-by-step explanation:

The terms of purchase that are 2/10 n/30 means that if the payment is made within the 10 days of purchase, here within in 10 days after July 5, a cash discount of 2% of the invoice price will be offered to the customer.

The payment term n/30 means that the payment should be made within 30 days of the purchase, that is within 30 days from July 5.

Initially we purchased goods worth $1800 and passed the entry where we debited merchandise account by $1800 and credited Accounts Payable account by $1800 as we have purchased merchandise on credit.

The purchases on July 5 were of $1800 but on July 7, we returned merchandise worth $200 which means that the Accounts Payable reduced by $200 to $1600.

So the final payment that was made on July 28 was of $1600 as the Accounts Payable for this particular purchase was outstanding for $1600 and the discount period had already expired so no discount was received.

Answer 2

The amount of the cash paid on July 28 equals:

D) $1,600.

Step-by-step explanation:

Invoice 1800

Discount rate 100%-2%

Return 200,00

Received 1.600,00

a. What is Jangles' outstanding balance?

Oustandind balance 1.600,00