On March 12, Masterson Company, Inc. sold merchandise in the amount of $7,800 to Forsythe Company, with credit terms of 2/10, n/30. The cost of the items sold is $4,500. Masterson uses the perpetual inventory system. On March 15, Forsythe returns some of the merchandise. The selling price of the merchandise is $600 and the cost of the merchandise returned is $350. Forsythe pays the invoice on March 20, and takes the appropriate discount. The amount that Masterson receives from Forsythe on March 20 is:
A)$7,800.
B)$7,644.
C)$7,044.
D)$7,056.
E)$7,200.

Question

Quizplus · Accepted Answer

The original invoice amount is $7,800. Forsythe returns merchandise worth $600, reducing the invoice to $7,200. Forsythe pays within the discount period, so they receive a 2% discount on $7,200, which is $144. Therefore, the amount Masterson receives is $7,200 - $144 = $7,056.