Anthony Company sold merchandise on account to a customer at a price of $5,000.The merchandise cost Anthony $4,200.The terms of the sale were 3/10,n/30.If the customer paid within the discount period,by how much did this transaction increase Anthony's net income?
A)$5,000
B)$ 800
C)$ 650
D)$ 300

Question

Quizplus · Accepted Answer

The transaction increased Anthony's net income by $650. This is because the customer took advantage of the 3% discount on the $5,000 sales price ($5,000 * 3% = $150), paying only $4,850 ($5,000 - $150). The cost of the merchandise was $4,200, so the net income increase is $4,850 (revenue after discount) - $4,200 (cost) = $650.

Anthony Company Sold Merchandise on Account to a Customer at a Price