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Consider the following facts: Company A sells merchandise on account for $6,000 to Company C; The...

Question:

Consider the following facts:

- Company A sells merchandise on account for $6,000 to Company C

- The credit terms of the sale are 2/10, n/30

- Company C returns $1,200 of the merchandise

- Company C pays the outstanding balance within the discount period

How much does Company C pay to settle its outstanding balance?

Merchandising transactions: receiving and paying the due amount within the discount period

In merchandising operations, the customers could pay the amount due (or part of the amount) within the discount period. The amount is calculated after deducting the cash discount which is offer within the discount period. If they are any purchase returns, it should be deducted from the balance of the accounts receivable before calculating the discount.

Answer and Explanation:

How much does Company C pay to settle its outstanding balance:

First, the discount should be calculated on the balance of the accounts receivable...

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Merchandising Business: Definition & Examples

from Principles of Marketing: Help and Review

Chapter 1 / Lesson 8
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