Question

A company purchased $11,900 of merchandise on June 15 with terms of 2/10, n/45, and FOB shipping point. The freight charge, $1,450, was added to the invoice amount. On June 20, it returned $2,320 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:

Answer 1

Notes:
	1) Credit terms of 2/10 , n/45 means if the payment is made within 10 days than 2% cash discount is allowed.
	2) For calculating number of days, purchase date is excluded
Solution:
	CALCULATION OF DISCOUNT TAKEN ON PURCHASE OF INVENTORY
	Purchase Cost of inventory	$                    11,900
	Less: Purchase Return	$                       2,320
	Net Purhcase	$                       9,580
	Add: Freight Charges added in invoice Amount	$                       1,450
	Total Amount Payable (A)	$                    11,030
	Purchase discount % =	2%
	Discount Taken ($ 9,580 X 2%) (B)	$                          192
	Cash Payable (A-B)	$                    10,838
Answer =
	Discount Entitled if paid as on June 24 =	$                          192
	Cash Paid Equal to	$                    10,838