Cosmos Company on July 15 sells merchandise on account to Cajon Co. for $6000 terms 2/10 n/30. On July 20 Cajon Co. returns merchandise worth $1000 to Cosmos Company. On July 24 payment is received from Cajon Co. for the balance due. What is the amount of cash received?

Question

Quizplus · Accepted Answer

The total amount of merchandise purchased by Cajon Co. was $6000, but they returned $1000 worth of merchandise. This brings the net balance due to $5000 ($6000 - $1000). Cajon Co. is eligible for a 2% discount if they make the payment within 10 days, which would be $100 ($5000 x 0.02). Therefore, the total amount of cash received by Cosmos Company would be $4900 ($5000 - $100).

Cosmos Company on July 15 Sells Merchandise on Account to Cajon