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Beckett Company sold merchandise on account for $12,600, terms 2/10, n/30. Freight charges of $450 were prepaid by Beckett Company and added to the invoice. The customer returned $1,800 of merchandise before making the payment then paid the invoice within the discount period. What is the amount Beckett Company received?

Question

Beckett Company sold merchandise on account for 12,600,terms2/10,n/30.Freightchargesof12,600, terms 2/10, n/30. Freight charges of 450 were prepaid by Beckett Company and added to the invoice. The customer returned $1,800 of merchandise before making the payment then paid the invoice within the discount period. What is the amount Beckett Company received?

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Solution

First, let's break down the information given:

  1. Beckett Company sold merchandise on account for 12,600.ThismeansthecustomerowesBeckettCompany12,600. This means the customer owes Beckett Company 12,600.

  2. The terms 2/10, n/30 mean that the customer can take a 2% discount if they pay within 10 days (the discount period). If not, the full amount is due within 30 days.

  3. Freight charges of 450wereprepaidbyBeckettCompanyandaddedtotheinvoice.Thisincreasestheamountthecustomerowesto450 were prepaid by Beckett Company and added to the invoice. This increases the amount the customer owes to 12,600 + 450=450 = 13,050.

  4. The customer returned 1,800ofmerchandise.Thisreducestheamountthecustomerowesto1,800 of merchandise. This reduces the amount the customer owes to 13,050 - 1,800=1,800 = 11,250.

  5. The customer paid the invoice within the discount period. This means they get a 2% discount on the 11,250.Thediscountis11,250. The discount is 11,250 * 0.02 = $225.

So, the amount Beckett Company received is 11,250−11,250 - 225 = $11,025.

This problem has been solved

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