A company purchases merchandise with a catalog price of $20,000.The company receives a 35% trade discount from the seller.The seller also offers credit terms of 2/10,n/30.Assuming no returns were made and that payment was made within the discount period,what is the net cost of the merchandise?
A)$13,720.
B)$19,600.
C)$6,860.
D)$13,000.
E)$12,740.

Question

Quizplus · Accepted Answer

Catalog price = $20,000
Trade discount = 35%
Amount after trade discount = $20,000 - ($20,000 * 35%) = $13,000
Discount terms = 2/10, n/30
This means a 2% discount is offered if payment is made within 10 days, otherwise, the full amount is due in 30 days. 
Net cost of the merchandise with the discount = $13,000 - ($13,000 * 2%) = $12,740
Therefore, the correct answer is E.

A Company Purchases Merchandise with a Catalog Price of $20,000