Question

A company purchased $10,100 of merchandise on June 15 with terms of 2/10, n/45, and FOB shipping point. The freight charge was $550 and was prepaid by the seller. On June 20, it returned $880 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:a. $10,650.b. $10,430.c. $9,586.d. $10,330.e. $9,224.

Answer 1

c. $9,586

Step-by-step explanation:

The computation of the cash paid is shown below:

= Merchandise amount - return and allowances - discount + freight charges

= $10,100 - $880 - $184.40 + $550

= $9,586

The discount = (Merchandise amount - return and allowances) × discount rate

= ($101,00 - $880) × 2%

= $184.40

Simply we deducted the returned goods and discount and added the freight charges to the merchandise amount so that the accurate amount can come