Question

On January 5, Kelsey Company sold merchandise on account to Buyer Co. for 1,500 with terms 3/10, n/30. On January 10, Buyer Co. returns merchandise worth300 to Kelsey Company. On January 14, Buyer Co. pays the balance due. What is the amount of cash received by Kelsey Company on January 14?

Answer 1

The amount of cash received by Kelsey Company on January 14 is $1,164 after deducting the discount.

Step-by-step explanation:

The amount of cash received by Kelsey Company on January 14 is $1,164. Buyers Co. returned merchandise worth $300, so the remaining balance due is $1,200. Since the terms are 3/10, n/30, the buyer is entitled to a 3% discount if payment is made within 10 days. Thus, the buyer will receive a discount of $1,200 * 3% = $36. Therefore, the amount of cash received by Kelsey Company on January 14 is $1,200 - $36 = $1,164.