Question

After the amount due on a sale of $43,600, terms 2/10, n/eom, is received from a customer within the discount period, the seller consents to the return of the entire shipment for a cash refund. The cost of the merchandise returned is $26,160.

Question Content Area
a. What is the amount of the refund owed to the customer?

Answer 1

The amount of the refund owed to the customer is $41,064.

Here's how to calculate it:

The net amount due on the sale is $43,600 - (2% x $43,600) = $42,728.

When the customer returns the entire shipment, the seller owes a refund of the purchase price minus the cost of the merchandise returned.

The purchase price is $42,728, so the refund owed is $42,728 - $26,160 = $16,568.

However, since the customer paid $43,600, the refund is limited to that amount. Therefore, the refund owed to the customer is $41,064 ($43,600 - $2,536).