Question

A company purchases merchandise with a catalog price of $24,500. The company receives a 35% trade discount from the seller. The seller also offers credit terms of 2/10, n/30. Assuming no returns were made and that payment was made within the discount period, what is the net cost of the merchandise

Answer 1

The net cost of the merchandise is $15,697.5

Step-by-step explanation:

The 2/10, n / 30 means that if payment is made within 30 days there will a discount and there will also be an additional discount if payment made within 10 days in this case the 30 day discount is 35% and 2 % additional discount if paid within 10 days

Ten days

24500*0.02 = 490

24500-490 = 24 010

30 days

24101*0.35 = 8403.5

24101 - 8403.5 = $15697.5

Answer 2

$ 15606.5

Step-by-step explanation:

Catalog Price = $ 24500

Trade Discount = 35 %

Credit Term 2/10, n/30

Purchase Price = $ 24500- $ 24500 * 35 %= $ 24500-8575= 15925

As Payment is made with in the discount period( 2/10 n/30 meaning 2 % of discount will be given in the first ten days) an additional discount of

15925 * 2 % = 318.5 will be given

Net Cost would be $ 15925- $ 318.5= $ 15606.5

If the payment had been made after the first ten days the 2% discount would have not been allowed