Cosmos Corporation, which uses a perpetual inventory system, purchased $2,000 of merchandise on July 5 on account. Credit terms were 2/10, n/30. It returned $400 of the merchandise on July 9. Which of the following is one effect when Cosmos pays its bill on July 21?

Question

Houston Duran

Business

5 September, 08:50

Cosmos Corporation, which uses a perpetual inventory system, purchased $2,000 of merchandise on July 5 on account. Credit terms were 2/10, n/30. It returned $400 of the merchandise on July 9. Which of the following is one effect when Cosmos pays its bill on July 21?

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Jacey Tucker · Answer 1

The terms 2/10, n/30 mean that if the payment is made in 10 days there will be a 2% discount. And the payment needs to be made in 30 days.

As $400 of merchandise is returned only 1600 needs to be payed by Cosmos corporation. Cosmos bought the merchandise on July 5 and pays its bill on July 21 which is later than 10 days which means that they do not qualify for the discount. So Cosmos will have to pay the full $1600 on July 21