Question

During 2016, Radek Technologies sold merchandise for a total of $800,000. The cost of merchandise to Radek was $560,000. Radek offers credit terms of 2/10, n/30 to encourage early payment. At year-end, there are $24,000 of sales still eligible for the 2% discount.

A) Customers will receive a discount of $24,000.
B) The total sales amount is $824,000.
C) Customers can still receive a 2% discount on the $24,000.
D) The total cost of merchandise is $584,000

Answer 1

Customers can still receive a 2% discount on the $24,000 worth of sales at Radek Technologies, not a $24,000 discount. The total discount eligible is $480. The total sales and cost figures provided do not change as a result of potential discounts.

Step-by-step explanation:

During 2016, Radek Technologies sold merchandise totaling $800,000. The cost of merchandise to Radek was $560,000. With the credit terms of 2/10, n/30, a 2% discount is offered for payments within 10 days, net payment due in 30 days. At year-end, there is $24,000 of sales still eligible for the 2% discount which implies that customers can receive a discount if they pay early, specifically a 2% discount on $24,000 which amounts to $480.

Therefore, the correct statement is C) Customers can still receive a 2% discount on the $24,000. The discount amount on the eligible sales is calculated as 0.02 x $24,000 = $480, not $24,000. The total sales amount remains $800,000, and the total cost of merchandise is $560,000, without considering the discounts.