On March 12, Klein Company, Inc. 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. 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:

Question

Quizplus · Accepted Answer

Klein receives $7,644 from Babson on March 20. The discount period ended on March 22, so Babson is eligible for the 2% discount. The amount of the discount is $156 ($7,800 x 2%). The amount that Klein receives from Babson is $7,644 ($7,800 - $156).