On March 12,Klein Company sold merchandise in the amount of $7,800 to Babson Company,with credit terms of 2/10,n/30.The cost of the items sold is $4,500.Klein uses the perpetual inventory system and the gross method of accounting for sales.On March 15,Babson returns some of the merchandise.The selling price of the merchandise is $600 and the cost of the merchandise returned is $350.Babson pays the invoice on March 20,and takes the appropriate discount.The amount that Klein receives from Babson on March 20 is:
A)$7,800.
B)$7,644.
C)$7,044.
D)$7,056.
E)$7,200.

Question

Quizplus · Accepted Answer

Klein initially sells merchandise worth $7,800 to Babson with a 2% discount if paid within 10 days. Babson returns merchandise worth $600, reducing the amount owed to $7,200 ($7,800 - $600). With the 2% discount on the reduced amount, Babson pays $7,056 ($7,200 - 2% of $7,200).

On March 12,Klein Company Sold Merchandise in the Amount of $7,800