Question

On June 15, Oakley Inc. sells inventory on account to Sunglass Hut (SH) for $7,500, terms 4/10, n/30. On June 20, SH returns to Oakley inventory that SH had purchased for $1,600. On June 24, SH completely fulfills its obligation to Oakley by making a cash payment. What is the amount of cash paid by SH to Oakley?

Answer 1

The correct answer is $5,664.

Step-by-step explanation:

According to the scenario, the computation of the given data are as follows:

Amount on Account = $7,500

Returned inventory = $1,600

So, we can calculate the total amount of cash paid by using following formula:

Amount of cash paid = (Amount on Account - Returned inventory ) × 96%

By putting the value, we get

Amount of cash paid = ($7,500 - $1,600) × 96%

= $5,664