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20 November, 12:01

Etcetera Clothing sold merchandise inventory on account at a price of $11,000 with payment terms of 2/10, n/30. The merchandise cost Etcetera Clothing $6,000. If the customer paid for the merchandise 5 days after receiving the invoice, how much cash was collected by Etcetera Clothing

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  1. 20 November, 12:09
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    Etcetera Clothing sold merchandise inventory on account at a price of $11,000 with payment terms of 2/10, n/30. The merchandise cost Etcetera Clothing $6,000. If the customer paid for the merchandise 5 days after receiving the invoice, how much cash was collected by Etcetera Clothing.

    The cash collected by Etcetera Clothing = $10,780

    Explanation:

    Cash collected = sales amount - less discount given

    = $11,000 - $11000 at 2%

    = $11,000 - $11000 (0.02)

    = $11000 - $220

    Cash collected = $10,780

    Therefore, based on the calculation made as above, the cash collected by Etcetera Clothing = $10,780
  2. 20 November, 12:22
    0
    Etcetera Clothing collected $10,780

    Explanation:

    Etcetera Clothing sells merchandise inventory on terms of 2/10, n/30, which means that it will give a cash discount to a customer of 2% when the payment is made within 10 days and the whole settlement of account must be made in 30 days.

    If the customer paid for the merchandise 5 days after receiving the invoice, the customer was granted the cash discount since the payment is still within the discount period.

    The amount of cash discount is $11,000 * 2% = $220

    Payment made to Etcetera Clothing will be $11,000 - $220 = $10,780
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