A business sells merchandise, $500, on account with terms of 1/20, n/60. The customer pays within the discount period. The amount recorded in the Cash Debit column is:

Question

Quizplus · Accepted Answer

The terms 1/20, n/60 mean the customer can take a 1% discount if they pay within 20 days; otherwise, the net (full) amount is due in 60 days. Since the customer pays within the discount period, they get a 1% discount on $500, which is $5. Therefore, they pay $500 - $5 = $495.

A Business Sells Merchandise, $500, on Account with Terms of 1/20