Question

A company purchased $4,000 worth of merchandise. Transportation costs were an additional $350. The company later returned $275 worth of merchandise and paid the invoice within the 2% cash discount period. The total amount paid for this merchandise is: ____A. $3,725.00B. $3,925.00 C. $3,995.00 D. $4,000.50 E. $4,075.00

Answer 1

D. $ 4,000.50

Step-by-step explanation:

Purchase of merchandise $ 4,000

Return of merchandise $ (275)

Net purchase of merchandise $ 3,725

Discount allowed @ 2 % of $ 3,725 $ (74.50)

Add: Transportation costs allowed $ 350

Total amount paid to merchandise $ 4,000.50

The merchandise returned is considered to determine the net purchases. Since the payment was made on the payment terms and discount is availed, that is also reduced.

The transportation costs is also added to the cost of the merchandise