On June 2, Plymouth Company sells merchandise on account for $5,000 to Merriweather Company with credit terms of 2/10, n/30. On June 5, Merriweather Company is granted a $500 allowance for merchandise that was slightly damaged. Merriweather pays the account on June 15. The amount collected by Plymouth is

Question

Quizplus · Accepted Answer

- The original amount of the sale was $5,000.
- Since the credit terms were 2/10, n/30, Merriweather Company is eligible for a 2% discount ($5,000 x 0.02 = $100) if they pay within 10 days.
- However, they were also granted a $500 allowance for damaged merchandise, which reduces their balance to $4,500 ($5,000 - $500 = $4,500).
- Merriweather pays on June 15, which is after the discount period, so they pay the full balance of $4,500.
- Therefore, the amount collected by Plymouth is $4,500.

On June 2, Plymouth Company Sells Merchandise on Account for $5,000