A company purchases merchandise with a catalog price of $20,000. The company receives a 35% trade discount from the seller. The seller also offers credit terms of 2/10, n/30. Assuming no returns were made and that payment was made within the discount period, what is the net cost of the merchandise?
A) $19,600.
B) $13,000.
C) $13,720.
D) $6,860.
E) $12,740.

Question

Quizplus · Accepted Answer

The net cost is calculated by first applying the trade discount: $20,000 - (35% of $20,000) = $13,000. Then, apply the 2% cash discount for early payment: $13,000 - (2% of $13,000) = $12,740.

A Company Purchases Merchandise with a Catalog Price of $20,000