Question

If a retailer purchased inventory in the amount of $750, terms 2/10, n/60, returned $30 of the inventory for a full refund, and received an allowance for $95, how much would the discount be if the retailer remitted payment within the discount window?

a) $15
b) $30
c) $45
d) $60

Answer 1

The retailer would receive a discount of $12.50, which is closest to option a) $15, after applying the 2% discount to the adjusted invoice amount of $625 subtracting the returns and allowances from the original amount.

Step-by-step explanation:

To calculate the discount the retailer would receive if payment is remitted within the discount window, we first need to calculate the adjusted amount of the invoice after returns and allowances. Starting with the original purchase amount of $750, we subtract the $30 return of inventory for a full refund and the $95 allowance. This gives us an adjusted invoice amount of $750 - $30 - $95 = $625. The terms of the sale are 2/10, n/60, which means the retailer can take a 2% discount if the payment is made within 10 days. Applying this 2% discount to the adjusted invoice amount of $625, the discount would be 2% of $625, which equals $12.50. Therefore, the answer is closest to option a) $15.