Question

A company purchased $10,400 of merchandise on June 15 with terms of 3/10, n/45, and FOB shipping point. The freight charge, $700, was added to the invoice amount. On June 20, it returned $1,120 of that merchandise. On June 24, it paid the balance owed for the merchandise taking any discount it is entitled to. The cash paid on June 24 equals:A company purchased $10,400 of merchandise on June 15 with terms of 3/10, n/45, and FOB shipping point. The freight charge, $700, was added to the invoice amount. On June 20, it returned $1,120 of that merchandise. On June 24, it paid the balance owed for the merchandise taking any discount it is entitled to. The cash paid on June 24 equals:

Answer 1

The cash paid on June 24 for the merchandise is $9,001.60.

Step-by-step explanation:

The total amount spent on merchandise is $10,400 and the freight charge is $700. The company returned $1,120 worth of merchandise.

To calculate the balance owed, we subtract the returned amount from the total amount spent, which gives us $10,400 - $1,120 = $9,280.

The terms of the purchase are 3/10, n/45, which means that the company can take a 3% discount if they pay within 10 days, and they have a credit period of 45 days.

Since the payment was made on June 24, which is within 10 days, the company can take the discount.

To calculate the cash paid on June 24, we subtract the discount from the balance owed. The discount is calculated as 3% of $9,280, which is $278.40.

Therefore, the cash paid on June 24 is $9,280 - $278.40 = $9,001.60.