If merchandise is bought with a list price of $2,800, subject to a 30 percent trade discount and a cash discount of 2/10, n/30, the amount debited to Purchases is $1,920.80.

Question

Quizplus · Accepted Answer

The amount debited to Purchases is $1,960. After applying the 30% trade discount on the list price of $2,800, the amount is $1,960 ($2,800 - 30% of $2,800 = $1,960). The cash discount of 2/10, n/30 applies to payment terms and would affect the amount paid if the invoice is paid within 10 days, not the amount debited to Purchases.

If Merchandise Is Bought with a List Price of $2,800