Question

Willetta Company purchases inventory for $22,000 with terms 2/10, n/30. It then returns $3,200 of the inventory purchased to the supplier and also receives an allowance for defective inventory of $220. The company pays the amount due within the discount period. What is the amount of the discount that will be taken? (Round your answer to the nearest dollar amount.)

a. $320

b. $436

c. $372

Answer 1

c. $372

Step-by-step explanation:

Terms of sale 2/10, n/30 means there is a discount of 2% is available on payment of due amount within discount period of 10 days after sale with net credit period of 30 days.

As per given data

Purchases = $22,000

Sales return = $3,200

Defective Allowance = $220

Receivable = $22,000 - $3,200 - $220 = $18,580

As the payment is made within discount period, so discount will be availed on the amount due

Discount = $18,580 x 2% = $372