Fowler Company on July 15 sells merchandise on account to Coffey Co. for $1,000, terms 2/10, n/30. On July 20 Coffey Co. returns merchandise worth $400 to Fowler Company. On July 24 payment is received from Coffey Co. for the balance due. What is the amount of cash received?
A) $600
B) $588
C) $580
D) $1,000

Question

Quizplus · Accepted Answer

The original sale was $1,000. After a return of $400, the balance is $600. Coffey Co. pays within the discount period, so they receive a 2% discount on $600, which is $12. Therefore, the cash received is $600 - $12 = $588.

Fowler Company on July 15 Sells Merchandise on Account to Coffey