Juniper Company, Inc. uses a perpetual inventory system. The company purchased $9,750 of merchandise on August 7 with terms 1/10, n/30. On August 11, it returned $1,500 worth of merchandise. On August 16, it paid the full amount due. The amount of the cash paid on August 16 equals:
A)$8,167.50.
B)$9,652.50.
C)$9,750.00.
D)$8,250.00.
E)$8,152.50.

Question

Quizplus · Accepted Answer

The correct answer is A because the company took advantage of the 1% discount for paying within 10 days. The amount of the discount is $9,750 x 1% = $97.50. The amount of the cash paid is $9,750 - $97.50 = $8,167.50.