Question

Best Discount Store uses the perpetual system for inventory and had a sale on account to Mark Watson of $3,000 with terms 1/10 or n/30. Before payment, Mr. Watson returned $1,000 of the merchandise. Mr. Watson paid within the discount period.

What is the amount of cash Best Discount Store received?

-$1,980
-$2,000
-$1,970
-$2,970

Answer 1

$1,980

Step-by-step explanation:

The computation of the amount of cash Best Discount Store received is shown below:

= Sale value - returned merchandise inventory - discount

where,

Discount is

= (Sale value - returned merchandise inventory) × discount rate

= ($3,000 - $1,000) × 1%

= $20

So, the amount of cash received is

= $3,000 - $1000 - $20

= $1,980