A credit sale of $4,000 is made on April 25, terms 2/10, n/30, on which a return of $250 is granted on April 28. What amount is received as payment in full on May 4?

Question

Quizplus · Accepted Answer

The net amount of the credit sale is $4,000 - $250 = $3,750.
The discount period is within 10 days of the invoice date, so the buyer can take a discount of 2% on the net amount.
The payment due date is 30 days from the invoice date, so if the buyer does not take the discount, the full net amount is due within 30 days.
If the buyer takes the discount, the payment due is the net amount minus the discount.
If the buyer returns goods, the return is deducted from the gross amount before calculating the payment due.

Here are the different scenarios:

- If the buyer pays within 10 days and takes the discount:
Payment = $3,750 - (2% x $3,750) = $3,675
- If the buyer pays within 10 days but does not take the discount:
Payment = $3,750
- If the buyer pays after 10 days but within 30 days and does not take the discount:
Payment = $3,750
- If the buyer pays after 10 days but within 30 days and takes the discount:
Payment = $3,675
- If the buyer returns goods and pays within 10 days:
Payment = $4,000 - $250 - (2% x ($4,000 - $250)) = $3,920
- If the buyer returns goods and pays after 10 days but within 30 days:
Payment = $4,000 - $250 = $3,750

Based on the given information, the buyer granted a return on April 28 (within the discount period), and the payment in full was received on May 4 (within the credit period but after the discount period). Therefore, the payment due is the net amount after the return and without the discount: $3,750 - $250 = $3,500. Since this payment is made within the credit period but after the discount period, the buyer cannot take the discount. Hence, the correct answer is A) $3,675.

A Credit Sale of $4,000 Is Made on April 25