Final answer:
To calculate the cash required for Bowers Company to pay the invoice within the discount period, subtract the returned merchandise value from the original invoice and apply the 2% discount to the result. The cash required for payment is $7,448.
Step-by-step explanation:
The question relates to figuring out the amount of cash required for Bowers Company to pay an invoice to Saunders Corp. after returning some merchandise.
Originally, Bowers purchased merchandise worth $9,300 with a 2/10, n/30 payment term, meaning they could take a 2% discount if paid within ten days or pay the full amount in thirty days.
They returned $1,700 worth of merchandise, which reduces the amount they owe to $9,300 - $1,700 = $7,600. If Bowers takes advantage of the 2% discount, they need to pay 98% of $7,600. Cash required for payment with the discount is 0.98 * $7,600 = $7,448, rounded to the nearest dollar.
The complete question is: Bowers company purchased merchandise on account from saunders corp. for $9,300, terms 2/10, n/30. bowers returned merchandise with an invoice amount of $1,700 and received full credit. a. if bowers company pays the invoice within the discount period, what is the amount of cash required for the payment? if required, round the answer to the nearest dollar. is: