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A company sells goods on credit. On one sale, they sold it for $20,000 and offered a 2/10, net/30...

Question:

A company sells goods on credit. On one sale, they sold it for $20,000 and offered a 2/10, net/30 payment option. Two days after the sale, the customer complained and they allowed them a $1,000 sales allowance. The customer paid the net amount within 8 days after the sale.

The cash proceeds received by the seller are:

A. $20,000

B. $19,000

C. $18,600

D. $18,620

Discounts:

A discount is a way of reducing the price of an item, service, or the like for a given period of time. The discount may be offered as part of a sale or promotion, or it may be offered as a regular benefit for customers.

Answer and Explanation: 1

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Based on the above problem, the seller will grant a 2% discount if the customer pays its obligations within 10 days from the sale date as per payment...

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Cash Discount: Definition, Formula & Example

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Chapter 1 / Lesson 11
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Learn what a cash discount is. See the differences between trade discount and cash discount. Find examples to understand the accounting treatment of a cash discount.


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