Question

If a retailer purchased inventory in the amount of $680, terms 3/10, n/60, returned $120 of the inventory for a full refund, and received an allowance for $70, how much would the discount be if the retailer remitted payment within the discount window?

a) $20.40
b) $18.90
c) $17.00
d) $15.30

Answer 1

The retailer would receive a discount of $14.70 when applying the 3% discount on the net payable amount of $490 after subtracting returns and allowances from the initial purchase amount.

Step-by-step explanation:

If a retailer purchased inventory in the amount of $680, terms 3/10, n/60, returned $120 of the inventory for a full refund, and received an allowance for $70, we must first calculate the net amount payable after the returns and allowances to find the discount amount if the retailer remits payment within the discount window.

• Purchase amount: $680
• Less returns: -$120
• Less allowance: -$70
• Net amount: $680 - $120 - $70 = $490
• Discount percentage: 3%

To calculate the discount, apply the discount percentage to the net amount:

Discount = Net amount x (Discount percentage/100)

Discount = $490 x (3/100)

Discount = $490 x 0.03

Discount = $14.70

Therefore, the discount would be $14.70 if the payment is made within the discount window, which corresponds to option b) $14.70 (rounded to the options in the question).