Question

Simmons sold merchandise to Drake for $5,000 with payment terms of 2/10, n/30. Two days later, Drake returned two of the units and received account credit in the amount of $2,000. If Drake pays his account in full within ten days of the invoice date, what is the amount of the sales discount?

Answer 1

Computation of the amount of sales discount:

Value of sold merchandise = $5000

Value of returned merchandise = $2000

Balance to be paid = $ 3000

As per the question, 2/10 the discount is 2% if paid within 10 days.

(2/10 ,n/30 is a credit term. It means that buyers are eligible to receive 2% discount if the amount due is paid within 10 days.After 10 days,the full invoice amount is due in 30 days without 2% discount.)

Therefore, the discount will be $3000*2% = $60

So the amount that Drake has to pay to Simmon is $3000-$60 = $2940.