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16 October, 04:26

Syfy Company on July 15 sells merchandise on account to Eureka Co. for $5,000, terms 2/10, n/30. On July 20 Eureka Co. returns merchandise worth $2,000 to Syfy Company. On July 24 payment is received from Eureka Co. for the balance due. What is the amount of cash received

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  1. 16 October, 04:54
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    The amount of cash received is $2940

    Explanation:

    The cash received by Syfy on July 24 will be for the amount due after accounting for sales return by Eureka and after deducting the sales discount / discount allowed.

    The balance in accounts receivable account of Syfy after sales return by Eureka on July 20 will be, 5000 - 2000 = $3000

    The payments terms allow a 2% discount if payment is made within 10 days of purchases. Eureka paid within the discount period thus it availed a discount of,

    3000 * 0.02 = $60

    The amount of cash received by Syfy is = 3000 - 60 = $2940
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