On January 15, Nifty Company sells merchandise on account to Martinez Associates for $5,000 with terms 3/10, n/30.On January 20, Martinez returns merchandise worth $1,000 to Nifty.On January 24, payment is received from Martinez for the balance due.What is the amount of cash received?
A)$4,000
B)$3,880
C)$3,850
D)$2,800

Question

Quizplus · Accepted Answer

The original sale was $5,000. After a $1,000 return, the balance is $4,000. With terms 3/10, Martinez gets a 3% discount for paying within 10 days. The discount on $4,000 is $120, so the cash received is $4,000 - $120 = $3,880.

On January 15, Nifty Company Sells Merchandise on Account to Martinez