Etcetera Clothing sold merchandise inventory on account at a price of $16,000 with payment terms of 2/10,n/30.The merchandise cost Etcetera Clothing $11,000.If the customer paid for the merchandise 5 days after receiving the invoice,how much cash was collected by Etcetera Clothing?

Question

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The payment terms 2/10,n/30 mean the customer gets a 2% discount if they pay within 10 days. Since the customer paid within 5 days, they are eligible for the discount. The discount is 2% of $16,000, which is $320. Therefore, the cash collected is $16,000 - $320 = $15,680.

Etcetera Clothing Sold Merchandise Inventory on Account at a Price