Question

a company purchased $10,600 of merchandise on june 15 with terms of 3/10, n/45, and fob shipping point. on june 20, it returned $1,280 of that merchandise. the shipping charges for the purchase totaled $800. 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: multiple choice $11,080. $11,400. $10,980. $9,840. $8,722.

Answer 1

The company is entitled to a discount for paying early and must add shipping charges, resulting in a total of $9,840.40 paid on June 24.

Step-by-step explanation:

The company initially purchased merchandise for $10,600 and later returned $1,280 worth of merchandise. With the terms of 3/10, n/45, and FOB shipping point, the company is eligible for a 3% discount if it pays within 10 days. The shipping charges amounted to $800. On June 24, within the discount period, the company paid the balance after taking the discount into account. The calculation for the final cash paid is as follows:

• Original purchase amount: $10,600.00
• Less returns: -$1,280.00
• Subtotal: $9,320.00
• Discount (3% of $9,320): -$279.60
• Shipping charges: +$800.00
• Total cash paid: $9,320.00 - $279.60 + $800.00 = $9,840.40

The closest answer to this calculation would be $9,840.00, since we typically round to the nearest dollar in business transactions.