On May 12, Kelsey Company sold merchandise on account to Buyer Co. for $2,000 with terms 2/10, n/30. On May 18, Buyer Co. returns merchandise worth $200 to Kelsey Company. On May 24, Buyer Co. pays the balance due. What is the amount of cash received by Kelsey Company on May 24?

Question

Davin Sparks

Business

28 October, 17:31

On May 12, Kelsey Company sold merchandise on account to Buyer Co. for $2,000 with terms 2/10, n/30. On May 18, Buyer Co. returns merchandise worth $200 to Kelsey Company. On May 24, Buyer Co. pays the balance due. What is the amount of cash received by Kelsey Company on May 24?

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Julianne Hanson · Answer 1

The terms 2/10, n/30 mean that if the payment is made with 10 days the buyer will get a 2% discount and the payment has to be made inside 30 days.

After $200 worth of merchandise is returned the, Kelsey company are owed $1800

Because the payment is made after more than 10 days there will be no discount and buyer co will have to pay in full. The amount of cash received by Kelsey Company on May 24 will be $1800