Syfy Company on July 15 sells merchandise on account to Eureka Co. for $5,000, terms 2/10, n/30. On July 20 Eureka Co. returns merchandise worth $2,000 to Syfy Company. On July 24 payment is received from Eureka Co. for the balance due. What is the amount of cash received?

Question

Quizplus · Accepted Answer

The original amount owed by Eureka Co. is $5,000. They returned $2,000 of merchandise, so the new balance is $3,000. Eureka Co. is eligible for the 2% discount if they pay within 10 days, so they can deduct $60 ($3,000 x 0.02) from the balance. Therefore, the amount of cash received by Syfy Company is $2,940 ($3,000 - $60).

Syfy Company on July 15 Sells Merchandise on Account to Eureka