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Purchases transactions
Bowers Company purchased merchandise on account from Saunders Corp. for $9,100, terms 1/10, n/30. Bowers
returned merchandise with an invoice amount of $1,900 and received full credit.
a. If Bowers Company pays the invoice within the discount period, what is the amount of cash required for the
payment? If required, round the answer to the nearest dollar.

Respuesta :

anthougo

The amount of cash required by The Bowers Company to make the payment for the purchase of the merchandise from Saunders Corp. within the discount period of 10 days is $7,128.

  • Bowers Company will enjoy a discount of $72 ($7,200 x 1%) because it is able to settle within 10 days from the date of the purchase.

  • The terms of the purchase specified 1% discount if payment is made within 10 days and full settlement within 30 days.

Data Analysis and Calculations:

Debit Inventory $9,100 Credit Accounts Payable (Sanders Corp.) $9,100

Trade terms = 1/10, n/30

Debit Accounts Payable (Sanders Corp.) $1,900 Credit Inventory $1,900

Debit Accounts Payable (Sanders Corp.) $7,200  ($9,100 - $1,900) Credit Cash $7,128 ($7,200 - $72) Credit Cash Discounts $72 ($7,200 x 1%)

Thus, the credit period expires after 30 days and the cash required for the payment is $7,128 if the discount window of 10 days is utilized.

Learn more about cash discounts at https://brainly.com/question/20041802

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