First Company sold merchandise on credit to Second Company for $1,000 on July 1, with terms of 2/10, net /30. On July 6, Second returned $200 worth of merchandise claiming the materials were defective. On July 8, First received a payment from Second and credited Accounts Receivable for $450. On July 24, Second Company paid the remaining balance on its account.
See First Company information above. How much was the total Sales Discounts given to Second during July?

Question

Quizplus · Accepted Answer

The sales discount is 2% if paid within 10 days. After the return, the amount due was $800. Second Company paid $450 on July 8, which is within the discount period, so they received a discount of $9 ($450 * 2%). The remaining balance was paid after the discount period, so no discount was applied to that payment.

First Company Sold Merchandise on Credit to Second Company for $1,000