A retailer purchases merchandise with a catalog list price of $30,000. The retailer receives a 15% trade discount and credit terms of 2/10, n/30. How much cash will be needed to pay this invoice within the discount period?

Question

Quizplus · Accepted Answer

The trade discount is 15%, so the retailer only needs to pay 85% of the catalog list price:
$30,000 x 0.85 = $25,500

To receive the 2/10 discount, the retailer must pay within 10 days of the invoice date. The discount is 2% of the net amount due:
$25,500 x 0.02 = $510

So the total amount the retailer needs to pay within the discount period is:
$25,500 - $510 = $24,990

Therefore, the correct answer is D.

A Retailer Purchases Merchandise with a Catalog List Price of $30,000