Question

Cosmos company on july 15 sells merchandise on account to cajon co. for $6,000, terms 2/10, n/30. on july 20 cajon co. returns merchandise worth $1,000 to cosmos company. on july 24 payment is received from cajon co. for the balance due. what is the amount of cash received?

Answer 1

On July 15, there is pending 6000 on the cash account.

Then on July 20, Cajon Co. returns the merchandise of 1000, so the pending cash decreases and now it is only 5000.

Afterwards, on July 24, Cajon paid for the merchandise. Since the credit terms is 2/10, 2 percent discount will be given if they paid within 10 days. So 5000 multiplied by . 02 = 100. 5000 - 100 = $4900 is the amount of cash received.