Question

Kern Company sells merchandise on account for $6,000 to Block Company with credit terms of 2/10, n/30. Block Company returns $1,200 of merchandise that was damaged, along with a check to settle the account within the discount period. What is the amount of the check?

Answer 1

The amount of the check that Block Company sends to Kern Company after returning damaged merchandise and applying the cash discount within the discount period is $4,704.

Step-by-step explanation:

The question refers to a transaction between Kern Company and Block Company involving a sale on credit terms with a sales return and cash discount. To calculate the amount of the check that Block Company needs to send to Kern Company to settle the account, we must first subtract the returned merchandise amount from the original sale amount. Then we apply the discount to the remaining balance.

The original sale amount was $6,000. Block Company returned merchandise worth $1,200, which leaves us with a new balance of $6,000 - $1,200 = $4,800. Next, since Block Company is paying within the discount period, they are entitled to a 2% discount. The discount on $4,800 is 2% of $4,800, which is $4,800 x 0.02 = $96.

To find the final amount of the check, we subtract the discount from the balance after the return: $4,800 - $96 = $4,704. This is the amount that Block Company will send to Kern Company in the form of a check to settle the account.