Asked by Bianca Benincasa on May 12, 2024
Verified
A retailer purchases merchandise with a catalog list price of $30,000. The retailer receives a 15% trade discount and has credit terms of 2/10, n/30. How much cash will be needed to pay this invoice within the discount period?
A) $30,000
B) $24,900
C) $29,400
D) $24,990
Trade Discount
A reduction from the list price granted by a seller to a buyer, often based on the volume of goods purchased or to promote sales.
Cash Payment
A transaction in which payment for goods or services is made in cash at the time of purchase.
- Assess how trade discounts influence the accounting of inventory.
- Learn about the positive aspects of obtaining discounts on purchases and the techniques for calculating them.
Verified Answer
SL
Samantha LibalMay 13, 2024
Final Answer :
D
Explanation :
The trade discount is 15%, so the retailer pays 85% of the catalog list price.
85% of $30,000 = $25,500
To calculate the amount due within the discount period, we take the 2% discount off of the amount owed:
2% of $25,500 = $510
The amount the retailer needs to pay within the discount period is:
$25,500 - $510 = $24,990
Therefore, the answer is D, $24,990.
85% of $30,000 = $25,500
To calculate the amount due within the discount period, we take the 2% discount off of the amount owed:
2% of $25,500 = $510
The amount the retailer needs to pay within the discount period is:
$25,500 - $510 = $24,990
Therefore, the answer is D, $24,990.
Learning Objectives
- Assess how trade discounts influence the accounting of inventory.
- Learn about the positive aspects of obtaining discounts on purchases and the techniques for calculating them.