If merchandise is bought with a list price of $3,500, subject to a 25 percent trade discount and a cash discount of 2/10, n/30, the amount credited to Accounts Payable is $2,625.

Question

Quizplus · Accepted Answer

The amount credited to Accounts Payable is the net amount of the purchase, which is the list price minus the trade discount and the cash discount. The trade discount is 25% of $3,500, which is $875. The cash discount is 2% of $3,500, which is $70. The net amount of the purchase is $3,500 - $875 - $70 = $2,625.

If Merchandise Is Bought with a List Price of $3,500