A company purchased $10,000 of merchandise on June 15 with terms of 3/10,n/45,and FOB shipping point.The freight charge,$500,was added to the invoice amount.On June 20,it returned $800 of that merchandise.On June 24,it paid the balance owed for the merchandise taking any discount it is entitled to.The cash paid on June 24 equals:

A) $9,224.
B) $10,200.
C) $10,500.
D) $10,300.
E) $9,424.

Question

Mohd Afnan Abdullah · Accepted Answer

Final Answer : E, Explanation :  The company initially purchased $10,000 of merchandise and had a freight charge of $500, making the total invoice amount $10,500. They returned $800 of merchandise, reducing the invoice amount to $9,700. The terms 3/10, n/45 indicate a 3% discount if paid within 10 days. Since the company paid on June 24, within the 10-day window from the purchase date (June 15), they are entitled to the discount. The discount on $9,700 is 3% of $9,700 = $291. Therefore, the amount paid after the discount is $9,700 - $291 = $9,409.

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