Question

Hill Company sells merchandise on account for 3,000 to Karr Company with credit terms of 2/10, n/30. Karr Company returns 500 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

Karr Company will send a check for $2,450 to settle the account, factoring in the merchandise return and the 2% discount.

Step-by-step explanation:

The student is asking how to calculate the amount of a payment made within a discount period after merchandise has been returned.

Originally, Karr Company purchased merchandise on account for $3,000 with credit terms of 2/10, n/30. This means they are entitled to a 2% discount if they pay within 10 days.

Karr Company returned merchandise worth $500. The original amount, $3,000, will be reduced by the $500 return, resulting in a new balance of $2,500. Applying the 2% discount to the $2,500 gives a discount amount of $50.

Therefore, the amount of the check that Karr Company will send to settle the account within the discount period is $2,500 - $50, which equals $2,450.