Juniper Company uses a perpetual inventory system and the gross method of accounting for purchases. The company purchased $9,750 of merchandise on August 7 with terms 1/10, n/30. On August 11, it returned $1,500 worth of merchandise.
- On August 16, it paid the full amount due. The amount of the cash paid on August 16 equals:
A) $8,152.50.
B) $8,167.50.
C) $9,750.00.
D) $8,250.00.
E) $9,652.50.

Question

Quizplus · Accepted Answer

The amount of the discount available is 1% of $9,750 which equals $97.50. Therefore, the amount to be paid after the discount is $9,750 - $97.50 = $9,652.50.

Since $1,500 of merchandise was returned, the net amount owing to the supplier is $9,652.50 - $1,500 = $8,152.50.

Therefore, the amount of cash paid on August 16 equals $8,152.50.

The correct answer is B.

Juniper Company Uses a Perpetual Inventory System and the Gross