Fowler Company on July 15 sells merchandise on account to Coffey Co. for $2,000, terms 2/10, n/30. On July 20, Coffey Co. returns merchandise worth $800 to Fowler Company. On July 24, payment is received from Coffey Co. for the balance due. What is the amount of cash received?

Question

Quizplus · Accepted Answer

The amount of the discount is calculated as follows: 
$2,000 x 2% = $40 
The amount of the credit for the returned merchandise is $800. 
The net amount due is calculated as follows: 
$2,000 - $40 - $800 = $1,160 
Therefore, the amount of cash received is $1,176 ($1,160 + $16 for the remaining part of the discount).

Fowler Company on July 15 Sells Merchandise on Account to Coffey