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Given the following information, compute the amount of cash remitted by the customer on February 21
Given the following information, compute the amount of cash remitted by the customer on February 21.
Feb. 14 - Sale on credit, terms of 1/15, n/30 - $12,000
Feb. 19 - AIIowance granted due to some items being damaged - $600
Feb. 21 - Payment in full received from the customer - $?
A) $11,996.
B) $12,000.
C) $11,286.
D) $11,400.
Expert Solution
Correct answer: Option C) $11,286.
Explanation:
- Payment received from customer = Sale value - Allowance granted due to damage - Cash discount
- Payment received from customer = $12,000 - $600 - $114
- Payment received from customer = $11,286
Note:
- Cash discount = (Sales - Damages) * 1%
- Cash discount = ($12,000 - $600) * 1%
- Cash discount = $114
The discount is given as the customer paid within 15 days.
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