Question

Cleese Company sells merchandise on account for $5,000 to Langston Company with credit terms of 2/10, n/30. Langston Company returns $1,000 of merchandise that was damaged, along with a check to settle the account within the discount period. What is the amount of the check

Answer 1

$ 3,290

Step-by-step explanation:

Given that

Merchandise on account sold to Langston = 5000 at 2/10 n/30

2/10 n/30 means 2/10 net 30 refers to a trade credit indicating that the buyer enjoys 2% discount.

Also,

Langston returned $1000 worth of damaged goods.

Thus,

Amount of check

= (Initial sales price - returned damaged goods) × 100% - discount

= (5000 - 1000) × 100 - 2

= (5000 - 1000) × 98%

= $ 3920