Michelin Jewellers completed the following transactions. Michelin Jewellers uses the perpetual inventory system. On 2 April, Michelin sold $9 900 of inventory, including GST, to a customer on credit with terms of 3/15, n/30. Michelin's cost of the inventory sold was $5 000, net of GST. On 4 April, the customer reported damaged goods and Michelin granted a $1 100 sales allowance, including GST. On 10 April, Michelin received payment from the customer. How much cash was received from the customer?
A)$8 800
B)$8 536
C)$8 730
D)$3 800

Question

Quizplus · Accepted Answer

The original sale was $9,900. After a $1,100 sales allowance, the amount due is $8,800. The customer pays within the discount period, so a 3% discount is applied: $8,800 - ($8,800 * 0.03) = $8,536.

Michelin Jewellers Completed the Following Transactions