Question

Grey Company purchased merchandise at an invoice price of $4,000 and terms of 2/10, n/30. Half of the merchandise was labeled inaccurately and was returned immediately to the supplier. If Grey Company pays the remaining amount of the invoice within the discount period, what should that amount be?

Answer 1

Amount of the invoice = $1,960

Step-by-step explanation:

Cost of purchase = $4,000

Purchase return = Half or purchase amount

= 4,000 x 1/2

= $2,000

Final amount due = Cost of goods purchased - Cost of goods returned

= 4,000 - 2,000

= $2,000

Discount amount = Final amount due x Discount percentage

= 2,000 x 2/100

= $40

Cash payment to be made = Final amount due - Discount amount

= 2,000 - 40

= $1,960