Merchandise is sold for $5,000 with terms 1/10, n/30.If $1,000 of the merchandise is returned prior to payment and the invoice is paid within the discount period, the amount of the sales discount is $40.

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The sales discount is calculated on the net amount after returns. The net amount is $4,000 ($5,000 - $1,000). The discount is 1% of $4,000, which is $40.

Merchandise Is Sold for $5,000 with Terms 1/10, N/30