Question

Molly Company purchased $6,000 of merchandise. Transportation costs were an additional $100 and were paid immediately. The company later returned $250 of the merchandise and paid the invoice after the 2% discount period. What is the total amount of cash paid by Molly Company on the day the invoice is paid?

a. $5,750
b. $6,100
c. $6,000
d. $5,635

Answer 1

To find the total cash paid by Molly Company, subtract the returned merchandise amount from the initial purchase, calculate the 2% discount on the remaining balance, then subtract the discount and add the transportation costs. Molly Company therefore pays a total of $5,735.

Step-by-step explanation:

The total amount of cash paid by Molly Company on the day the invoice is paid is calculated as follows:

1. Subtract the value of the returned merchandise from the original purchase: $6,000 - $250 = $5,750.
2. Calculate the 2% discount on the adjusted amount: $5,750 x 2% = $115.
3. Subtract the discount from the adjusted purchase amount: $5,750 - $115 = $5,635.
4. Add the transportation costs to the final amount: $5,635 + $100 = $5,735.

Therefore, the total amount of cash paid by Molly Company, ignoring any typos or irrelevant examples provided in the question, is $5,735.