Question

A seller uses a perpetual inventory system and on April 4 it sells 5,000 in merchandise with a cost of2,400 to a customer on credit terms of 3/10, n/30. What is the amount of the discount if the customer pays within the discount period?

1) $150
2) $240
3) $300
4) $500

Answer 1

The discount amount is $150 if the customer pays within the discount period under the credit terms of 3/10, n/30 on the sale of merchandise costing $5,000.

Step-by-step explanation:

The question poses a scenario where a seller uses a perpetual inventory system and has sold merchandise on credit terms of 3/10, n/30, meaning a 3% discount is available if the invoice is paid within 10 days, otherwise, the net amount is due in 30 days. If the customer pays within the discount period, they are entitled to a discount on their purchase. The cost of merchandise sold is $5,000, and thus the discount is calculated as 3% of $5,000.

To calculate: $5,000 * 0.03 = $150.

Therefore, the amount of the discount available to the customer should they pay within the discount period is $150.